■^ 


UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 


SCHOOL  OF  LAW 
LIBRARY 


COMMERCIAL  LAW 

AND 

INTERSTATE  COMMERCE 
LEGAL  FORMS 


By 

ALBERT  H.  PUTNEY,  A.  B.,  D.C.L.,  LL.  D. 

Author  of  "Government  in  the  United  States,"  "Law  Library,* 

"United  States  Constitutional  History  and  Law,"  etc. 

Member  of  the  Chicago  Bar 


COLUMBIA  INSTITUTE 

CHICAGO 


T 


Copyright,   1921.  by 

HILL  &  WHEELBB 

phica^o 


CONTENTS 


Chapter  I.    Introductory U 

Section     1.     Legal  Conceptions H 

Section     2.     Divisions  of  the  Law 13 

Section    3.     Plan  of  the  Book 13 

Chapter  II.    Contracts 15 

Section    4.    Definition   15 

Section    5.     Parties  to  a  Contract 15 

Section    6.     Parties  Incapable  of  Contracting 16 

Section     7.    Minors 16 

Section     8.     Insane     Persons,     Drunken     Persons     and 

Spendthrifts 19 

Section     9.     Married  Women 19 

Section  10.     Aliens    20 

Section  11.     The  Making  of  a  Contract 21 

Section  12.     The  Offer 21 

Section  13.     Acceptance    23 

Section  14.     Illegal  Contracts 24 

Section  15.     Agreements  in  Restraint  of  Trade 24 

Section  16.     Usurious  Contracts 25 

Section  17.     Contracts  Illegal  Because  of  Their  Effect 

on  the  Government 28 

Section  18.     Gambling   Contracts 29 

Section  19.     Other  Illegal  Contracts 30 

Section  20.     Agreements  Lawful  in  Themselves  to  Fur- 
ther an  Unlawful  Purpose ;  and  Agreements 

Illegal  Only  in  Part 30 

Section  21.     Consideration   31 

Section  22.     Required  Formalities  in  Making  a  Contract  34 

Section  23.     Statute  of  Frauds 34 

5 


6  CONTENTS 

Section  24.     Operation  of  the  Contract 37 

Section  25.     Assignment  of  Contracts 39 

Section  26.     Interpretation   and    Construction   of   Con- 
tracts    40 

Section  27.     Conditional  Contracts 40 

Section  28.     Certain  Defenses  to  a  Contract 41 

Section  29.     Discharge  of  Contracts 43 

Section  30.     Quasi  Contracts 46 

Section  31.     Situs  of  Contracts 47 

Chapter  III.    Agency 49 

Section  32.     Principal  and  Agent 49 

Section  33.     The  Dual  Character  of  Agency 50 

Section  34.     Classes  of  Agents 50 

Section  35.     Appointment  of  Agents 50 

Section  36.     Authority  of  the  Agent 52 

Section  37.     Execution  of  Contract 53 

Section  38.     Eelations  Between  Principal  and  Agent ...  53 
Section  39.     Relations    Between    Principal    and    Third 

Persons 53 

Section  40.     Relations  Between  Agent  and  Third  Person .  54 

Section  41.     Termination  of  Agency 54 

Ohapter  IV.    Partnership 57 

Section  42.     Definition   57 

Section  43.     Property  of  Firm 57 

Section  44,     Shares  in  Profit  and  Loss 58 

Section  45.     Nature  of  a  Partner's  Interest  in  Partner- 
ship   Property 59 

Section  46.     Power  of  Partners 59 

Section  47.     Government  of  Partnersliip 60 

Section  48.     Outgoing  and  Incoming  Partners 60 

Section  49.     Limited  Partnerships 61 

Section  50.     Termination  of  a  Partnership 61 

Chapter  V.     Sales 63 

Section  51.     Definition    63 

Section  52.     The  Contract  of  Sale 63 

Section  53.     Subjects  of  Sale 64 


CONTENTS 

Section  54.     Passing  the  Title 64 

Section  55.  Conditions,  Warranties  and  Eepresentations  65 

Section  56.     The  Doctrine  of  Caveat  Emptor 66 

Section  57.     Delivery  and  Acceptance 66 

Section  58.     Rights  of  Vendor 67 

Section  59.     Eemedies  of  Vendee 67 

Chapter  VI.    Bailments 69 

Section  60.     Definition    69 

Section  61.  Creation  and  Incidents  of  Bailment  Eelation  70 

Section  63.     Classification  of  Bailments 70 

Section  63.     Bailments  Involving  Special  Liability 71 

Section  64.     Inn- Keepers    71 

Section  65.     Common    Carriers 72 

Section  66.     Carriers  of  Passengers 75 

Chapter  VII.     Bills  and  Notes 77 

Section  67.     Historical    Development 77 

Section  68.     Bills  of  Exchange 78 

Section  69.     Promissory    Notes 78 

Section  70.  Common  Characteristics  of  Bills  and  Notes.  79 

Section  71.     Certainty  of  Terms 79 

Section  72.     Payment  of  Money 80 

Section  73.     Negotiability SO 

Section  74.     Presumption  of  Consideration 81 

Section  75.     Necessity  for  Delivery 82 

Section  76.     Days  of  Grace 82 

Section  77.     Acceptance  of  Bills  of  Exchange 82 

Section  78.     Transfer  of  Negotiable  Instruments 84 

Section  79.     Indorsements    85 

Section  80.     Presentment  and  Protest 86 

Section  81.     Protest 88 

Section  82.  Excuses  for  Failure  to  Present,  Give  Notice 

or  Protest 89 

Section  83.     Defenses  to  Bills  and  Notes 90 

Section  84.     Bona  Fide  Holdei-s  for  Value 91 

Section  85.     Accommodation   Paper 91 

Section  86.     Checks 93 

Section  87.  The  Uniform  Negotiable  Instrument  Act..  93 


CONTENTS 

Chapter  VIII.    Guakanty  and  Suretyship 145 

Section  88.     Definitions  and  Distinctions 145 

Section  89.     Who  May  Become  Surety  or  a  Guarantor. .  146 

Section  90.     Making  the  Contract 147 

Section  91.     Liability  of  Guarantor  and  Surety 147 

Section  92.     Liability  of  Guarantor 149 

Section  93.     Eights  and  Eemedies  of  Surety  and  Guar- 
antor    150 

Section  94.     Bonds  and  Bail 150 

Chapter  IX.    Insurance 153 

Section  95.     Nature  of  the  Contract 153 

Section  96.     The  Insurable  Interest 154 

Section  97.     The  Contract  of  Insurance 154 

Section  98.     Warranties  and  Eepresentations 155 

Chapter  X.    Torts 159 

Section     99.     Definition   159 

Section  100.     Deceit    159 

Section  101.     Trespass  to  Personal  Property 161 

Section  103.     Conspiracy    162 

Section  103.     Infringement  of    Patents,  Copyrights    or 

Trademarks   163 

Chapter  XI.    Criminal  Law 165 

Section  104.     Introductory  165 

Section  105.     Larceny  and  Embezzlemeut 165 

Section  106.     Counterfeiting    166 

Section  107.     False  Weights  and  Measures 167 

Section  108.     Crimes  Under  the    Interstate    Commerce 

Act    167 

Chapter  XII.    Damages 169 

Section  109.     Definition  and  Purpose 169 

Section  110.     Consequences  and  Losses 169 

Section  111.     Damages  in  Contract 170 

Chapter  XIII,    Equity  Jurisprudence .  173 

Section  112.     Definition  and  Scope  of  Equity 173 


CONTENTS 

Section  113.    Division  of  Equity 173 

Section  114.    Tniats   175 

Section  115.     Classification  of  Trusts 175 

Section  116.     Trustees 176 

Section  117.  Equitable  Belief  in  the  Case  of  Contracts.  176 

Section  118.     Injunctions 177 

Section  119.     Mortgages 179 

Chapter  XIV.    Bankruptcy 183 

Section  120.     National  and  State  Bankruptcy  Laws.  .  .  .  183 

Section  131.     Bankruptcy  Courts 184 

Section  132.     Voluntary  Bankruptcy 185 

Section  123.     Involuntary  Bankruptcy 186 

Section  124.     Duties  of  Bankrupts 186 

Section  135.     Protection,  Detention,  etc.,  of  Bankrupt.  .  188 

Section  126.     Compositions    189 

Section  127.    Liens  Dissolved  and  Conveyance  Set  Aside 

by  Bankruptcy 190 

Section  128.     Distribution  of  Bankrupt's  Estate 193 

Section  129.     Discharge  in  Bankruptcy 196 

Chapter  XV.     The  Regulation  of  Commerce 199 

Section  130.     The  Commerce  Clause  of  the  Federal  Con- 
stitution     199 

Section  131.    What  is  Commerce  ? 203 

Section  133.     What  Commerce  Does  Not  Include 208 

Section  133,    The  Power  of  the  States  Over  Interstate 

Commerce 212 

Section  134.     Gibbons  vs.  Ogden 213 

Section  135.     Later  Cases 214 

Section  136.     Crandall  vs.  Nevada 229 

Section  137.     The  Interstate  Commerce  Commission. . . .  233 

Section  138.     The  Anti-Trust  Act 238 

Section  139.     Recent  Statutes  and  Decisious 241 

Appendix  A.     Forms  in  Contracts 243 

Appendix  B.     Forms  in  Bankruptcy 277 

Appendix  C.     Interstate  Commerce  Act 383 

Quiz  Questions 445 

Index    461 


CHAPTER  I. 

INTRODUCTORY. 

Section  1.    Legal  Conceptions. 

The  four  great  legal  conceptions  of  the  law  are 
those  of  rights,  duties,  wrongs  and  remedies.  Al- 
though their  historical  origin  was,  in  point  of  time, 
in  the  reverse  order,^  the  logical  method  of  discussion 
is  in  the  order  given. 

Rights  are  of  two  classes;  the  general  rights 
which  a  person  has  against  all  members  of  the  com- 
munity, and  those  special  rights  which  he  has  as 
against  certain  special  persons.  Wherever  there  is 
a  right,  there  is  a  duty  on  the  part  of  others  not  to 
infringe  this  right.  In  the  case  of  a  general  right, 
the  duty  of  not  infringing  it  rests  upon  everyone; 
while  in  the  case  of  special  rights,  the  duty  of  not 
infringing  it  rests  upon  those  persons  against  whom 
the  right  exists.  Whenever  any  person,  upon  whom 
the  duty  of  not  infringing  any  right  belonging  to 
another  party  rests,  violates  such  duty,  there  is  a 
wrong.  If  the  violation  was  one  of  the  general 
rights,  created  by  law,  the  wrong  is  a  tort  as  against 
the  individual  injured,  and  may  also  be  a  crime  as 
against  the  public;  if  the  violation,  on  the  other 

'See  Robinson's  Elements  of  American  Jurisprudence,  p.  155;  Put- 
ney's Introduction  to  the  Study  of  Law.  Sec.  2;  Street's  Foundations  of 
Legal  Liability,  Vol.  Ill,  pp.  3-4. 

11 


IS  COMMERCIAL  LAW 

hand,  was  of  one  of  those  special  rights  existing  only 
against  certain  persons,  and  which  was  created  by 
agreement  between  such  persons,  then  the  wrong  is 
a  breach  of  contract.  A  legal  remedy  is  the  redress 
which  the  law  furnishes  for  such  legal  wrongs  as  are 
committed. 

The  connection  between  rights,  duties,  and 
wrongs,  must  be  carefully  remembered  in  order  to 
secure  a  clear  understanding  of  the  principles  of  law. 
There  can  be  no  duty  except  where  there  is  a  cor- 
relative right,  and  there  can  be  no  wrong  except 
where  there  is  a  right  violated. 

Section  2.    Divisions  of  the  Law. 

The  first  classification  of  the  law  is  that  into  In- 
ternational Law  and  National  or  Municipal-  law. 
National  or  Municipal  law  is  in  turn  divided  into 
Public  Law  and  Private  Law.  Public  Law  is  sub- 
divided into  Constitutional  Law,  the  Law  of  Public 
Corporations,  and  Criminal  Law. 

Private  Law  is  first  divided  into  Substantive 
Law  and  Adjective  Law.  Substantive  Law  treats  of 
rights  with  their  correlative  duties  and  wrongs, 
while  Adjective  Law  is  devoted  to  the  treatment  of 
the  remedies  provided  for  the  violation  of  duty,  and 
the' punishment  for  wrongs. 

IJnder  the  head  of  Substantive  Law  are  found 
the  subjects  of  Property,  Eeal  and  Personal,  Con- 
tracts, together  with  their  various  subdivisions, 
Equity  Jurisprudence  including  Trusts,  and  Torts. 

*The  term  Municipal  is  often  used  in  connection  with  the  govern- 
ment of  a  City,  but  its  use  in  the  study  of  private  law  is  as  here  given. 


INTRODUCTOEY  13 

Section  3.    Plan  of  the  Book. 

Although  the  law  has  well  been  described  as  a 
"seamless  whole"  and  although  each  branch  of  the 
law  is  more  or  less  connected  with  each  other  branch, 
still  only  certain  divisions  of  the  law  are  of  im- 
portance in  a  treatise  on  Commercial  Law.  In  this 
book  certain  of  the  subjects  taught  in  a  regular  law 
course  will  be  treated  fully;  other  subjects  will  be 
treated  more  briefly,  while  other  subjects  will  be  en- 
tirely omitted. 

The  corner  stone  in  the  study  of  law  is  the  sub- 
ject of  Contracts.  This  subject  will  be  taken  up  first 
in  the  book.  This  will  be  followed  in  order  by  the 
various  subdivisions  of  contracts  as  follows; 
Agency,  Partnership,  Sales,  Bailments  and  Carriers, 
Bills  and  Notes,  Guaranty  and  Siu-etyship  and  Insur- 
ance. A  more  condensed  account  will  then  be  given 
of  the  subjects  of  Torts,  Damages,  and  Equity  Juris- 
prudence, and  of  those  crimes  which  are  peculiarly 
connected  with  Commercial  Law,  and  the  two  final 
chapters  of  the  book,  will  be  respectively  devoted  to 
Bankruptcy,  and  the  Regulation  of  Interstate  Com- 
merce. 

The  chapter  on  the  regulation  of  commerce  is 
supplemented  by  the  summary  of  recent  legislation 
which  will  be  found  in  Part  IV  of  "Railway  Trans- 
portation— History,  Operation  and  Regulation." 
This  includes  the  provisions  of  the  Transportation 
Act,  1920,  and  the  latest  amendments  to  the  Inter- 
state Commerce  Act. 


CHAPTER  n. 

CONTRACTS. 
Section  4.    Definition. 

Among  the  many  definitions  of  contracts  which 
have  been  given  by  various  law  writers  and  judges, 
the  one  most  generally  followed  has  been  that  of 
Blackstone,  who  defines  a  contract  as  '*an  agreement, 
upon  sufficient  consideration  to  do,  or  not  to  do,  a 
particular  thing." 

This  is  the  definition  which  was  adopted  by  Chief 
Justice  Marshall  and  has  been  followed  by  the  Su- 
preme Court  of  the  United  States. 

The  following  five  requisites  are  generally  said  to 
be  necessary  for  the  creation  of  a  binding  contract : 

I.  Competent  parties. 

II.  An  agreement  between  these  parties  reached 
by  an  offer  made  by  one  and  accepted  by  another. 

m.  This  agreement  must  be  for  a  lawful  pur- 
pose. 

rV.    It  must  be  based  upon  a  consideration,  and 

V.  It  must  be  made  with  all  the  formalities  re- 
quired by  law. 

These  five  requisites  will  be  taken  up  in  the  fol- 
lowing sections. 

Section  5.    Parties  to  a  Contract. 

There  must,  of  course,  be  at  least  two  parties  to 
every  contract.    No  person  can  make  a  contract  with 

15 


16  COMMERCIAL  LAW 

himself;  neither  can  a  pei-son  in  his  own  capacity 
contract  with  himself  in  a  representative  capacity, 
unless  with  the  express  consent  of  the  party  he  repre- 
sents, and  in  such  a  case  the  contract  is  in  reality 
made  by  the  represented  party  himself.  There  is  no 
limit  to  the  number  of  persons  who  may  become  par- 
ties to  a  single  contract. 

In  general,  every  person  sui  juris  may  enter  into 
a  contract. 

Section  6.    Parties  Incapable  of  Contracting. 

The  following  classes  of  persons  lack  the  power  of 
contracting  either  wholly  or  in  part : 
Minors. 

Persons,  who  are  insane  or  otherwise  of  unsound 
mind. 

Drunken  persons. 

Spendthrifts,  for  whom  guardians  have  been  ap- 
pointed. 

Married  women. 

Section  7.    Minors. 

A  minor  is  a  person  who  has  not  reached  the  legal 
age  fixed  by  the  law  of  the  state  or  country  in  which 
he  lives.  Under  the  Common  Law,  this  age  was 
twenty-one  years,  and  the  same  age  is  still  fixed  for 
males  in  each  of  the  states  of  this  country  at  the 
present  time.  In  the  case  of  females  the  legal  age  is 
eighteen  years  in  a  little  more  than  half  the  states, 
and  twenty-one  in  the  balance.  A  person  becomes  of 
age  the  day  before  his  twenty-first  birthday. 

In  general,  the  contracts  of  a  minor  are  voidable. 


CONTRACTS  17 

By  this  is  meant  that  they  may  be  rescinded  at  the 
option  of  the  minor,  but  if  not  thus  rescinded  will  be 
good.  It  was  formerly  held  that  certain  contracts  of 
a  minor,  particularly  those  affecting  real  estate,  were 
absolutely  void,  but  this  distinction  was  of  no  par- 
ticular benefit  to  the  minor,  and  it  is  now  held  that  all 
of  a  minor's  contracts  are  voidable,  except  those  few 
which  the  law  makes  binding. 

The  most  important  class  of  contracts  upon  which 
a  minor  will  be  held  bound  are  those  for  necessaries 
furnished  to  him  at  his  own  request.  This  principle 
works  to  the  advantage  of  the  minor  himself,  as 
otherwise  he  might  be  unable  to  secure  the  means  of 
subsistence.  A  rather  broad  meaning  is  given  to  the 
term  '* necessaries,"  although  what  will  be  consid- 
ered necessaries  will  vary  in  different  cases. 

The  term  necessaries  includes  all  such  articles 
and  services  as  are  reasonably  necessary  to  supply 
the  personal  wants  of  a  person  in  the  particular  cir- 
cmnstances  and  conditions  of  life  of  the  minor.^ 

Under  the  term  "necessaries"  will  also  be  in- 
cluded food,  clothing,  and  lodging,  medical  attend- 
ance, and  instructions  in  elementary  schools,  or  while 
learning  a  trade.  The  liability  of  a  minor,  however, 
on  his  contract  for  necessaries  differs  from  that  of  an 
adult.  Strictly  speaking,  a  minor  is  not  bound  on  his 
promise  to  pay  for  the  necessaries,  but  on  an  implied 
promise  to  pay  what  such  articles  are  reasonably 
worth.  In  fact,  the  liability  of  the  minor  for  the 
necessaries  furnished  to  him  falls  rather  under  the 
head  of  quasi  contracts  than  that  of  pure  contracts.^ 

'Benjamin  on  Contracts,  p.  162. 
*See  Sec,  30, 


18  COMMEECIAL  LAW 

In  general,  it  may  be  said  here,  that,  with  some 
exceptions,  a  minor  is  liable  on  his  quasi  contracts 
the  same  as  an  adult.^ 

Another  class  of  contracts  upon  which  a  minor  is 
liable  are  those  made  in  settlement  of  some  tort  for 
which  he  is  legally  bound.  The  extent  of  the  liability 
of  a  minor  on  his  torts  is  much  broader  than  on  his 
contracts,  and  as  a  minor  is  already  liable  thereon 
and  as  the  law  encourages  the  settlement  of  suits 
rather  than  litigations,  it  permits  a  minor  to  make  a 
settlement  for  such  tort.  If,  however,  the  settlement 
is  an  unreasonable  one,  or  in  any  way  an  unfair  ad- 
vantage was  taken  of  the  minor,  the  settlement  may 
be  set  aside. 

Finally,  a  minor  is  absolutely  bound  on  those  con- 
tracts which  the  law  authorizes  him  to  make,  such  as, 
for  instance,  a  contract  for  enlistment  in  the  United 
States  Army.  Except  in  the  case  just  mentioned,  a 
minor  may  disaffirm  a  contract  which  he  has  made 
at  any  time  during  his  minority,  or  within  a  reason- 
able time  thereafter.  Such  disaffirmance  may  be 
either  express  or  implied.  An  implied  disaffirmance 
may  be  affected  by  actions  inconsistent  with  the  in- 
tention to  ratify  a  contract.  In  general,  when  a 
minor  disaffirms  a  contract,  he  must  return  whatever 
of  value  he  has  received  if  it  is  in  his  power  so  to  do. 
A  minor,  when  he  becomes  of  age,  may  ratify  a  con- 
tract, either  expressly  or  by  implication.  Such  ratifi- 
cation will  be  effected  by  failure  to  disaffirm  within  a 
reasonable  time  after  the  minor  has  reached  his  ma- 
jority. 

»id. 


CONTEACTS  19 

Section  8.    Insane  Persons,  Drunken  Persons  and 
Spendthrifts. 

The  making  of  a  contract  requires  the  meeting  of 
the  minds  of  the  parties,  and  as  an  insane  person  is 
incapable  of  understanding  the  nature  of  his  acts,  in 
theory,  it  is  impossible  for  a  person  of  this  character 
to  make  any  contract  at  all,  and  all  of  his  attempted 
contracts  are,  in  theory,  absolutely  void.  In  prac- 
tice, however,  while  the  contracts  of  a  person  who 
has  been  adjudged  insane  are  thus  considered  void, 
the  contract  of  other  parties  of  unsound  mind  will 
be  merely  voidable  at  his  option,  or  of  that  of  the 
person  qualified  to  choose  for  him.  Certain  contracts 
of  insane  persons  will  be  held  valid.  Such  are  con- 
tracts created  by  law,  and  contracts  for  necessaries, 
including  necessaries  for  his  wife  and  children. 

Drimkenness  may  be  a  defense  to  a  contract  if 
the  party  was  so  drunk  as  to  be  unaware  of  the  na- 
ture of  his  act.  In  such  cases  the  contract  is  void- 
able. The  law  here  differs  from  that  in  the  case  of 
torts  or  crimes,  where  drunkenness  is  no  defense. 

A  spendthrift  under  the  Common  Law,  and  in  a 
few  States  at  the  present  time,  may  be  adjudged  in- 
capable of  conducting  his  affairs,  and  a  conservator 
be  appointed  for  him.  In  such  cases  his  contracts 
become  voidable. 

Section  9.    Married  Women. 

In  no  branch  of  the  law  has  there  been  more  radi- 
cal changes  than  in  that  governing  married  women. 
Under  the  Common  Law,  married  women  were  abso- 
lutely without  the  power  to  contract,  and  their  con- 


20  COMMERCIAL  LAW 

tracts  were  not  merely  voidable,  but  void.  The  right 
to  contract  was  first  given  to  women,  to  a  very  lim- 
ited extent,  by  the  courts  of  equity,  who  permitted 
her  to  contract  and  to  sue  and  be  sued  in  regard  to 
her  ''separate  estate."  At  the  present  time  the  dis- 
abilities of  a  married  woman  in  regard  to  contract- 
ing have  been  almost  entirely  removed  by  statute. 
The  law  differs  somewhat  in  the  various  states;  some 
states  retaining  the  disabilities  to  a  greater  ex- 
tent than  others.  The  two  classes  of  contracts  which 
are  generally  the  last  which  a  married  woman  is  per- 
mitted to  enter  into  are  those  of  suretyship  and  part- 
nership. 

Section  10.    Aliens. 

The  law  is  now  much  more  favorable  to  aliens 
than  in  former  times.  A  resident  alien  will  have  the 
same  rights  of  contracting  as  a  citizen.  Some  re- 
strictions are  placed  upon  the  contracts  of  a  non- 
resident alien  even  in  a  friendly  countr}^,  the  most 
important  being  that  in  many  of  the  States  of  this 
country  a  non-resident  alien  cannot  purchase  real 
estate. 

In  case  of  war  contracts  between  citizens  of  the 
hostile  countries  residing  in  their  respective  coun- 
tries will  be  suspended.  An  alien  enemy,  however, 
may  be  sued  in  the  courts  on  their  contracts,  and  in 
such  a  case  he  will  be  given  the  right  to  appear  and 
defend. 

A  country  in  case  of  war  has  the  right  to  con- 
fiscate the  debts  owed  by  its  citizens  to  the  citizens  of 
the  hostile  country,  but  this  right  has  been  seldom 
exercised  in  modern  times. 


CONTRACTS  21 

Section  11.    The  Making  of  a  Contract. 

As  the  first  requisite  to  a  valid  contract  is  compe- 
tent parties,  so  the  second  requisite  is  that  such  com- 
petent parties  shall  mutually  agree  upon  the  terms  of 
the  contract.  As  it  is  commonly  expressed,  there 
must  be  a  meeting  of  the  minds  of  the  parties  in  order 
to  make  the  contract  binding.  Such  a  meeting  of 
minds  cannot  take  place  spontaneously  or  by  acci- 
dent, and  in  the  making  of  every  contract  one  party 
must  take  the  initiative  and  make  the  proposal  to 
the  other.  The  acceptance  of  the  offer  makes  the 
contract.  Every  true  contract  can  only  be  made  as 
the  result  of  an  offer  and  acceptance. 

Section  12.    The  Offer. 

An  offer  is  a  proposal  made  by  one  person  to  an- 
other that  they  enter  into  a  certain  agreement.  The 
proposed  agreement  may  be  either  for  the  sale  and 
purchase  of  property,  for  services  to  be  performed 
by  one  for  the  other,  or  for  any  other  legal  under- 
taking. 

An  offer  may  contemplate  the  performance  of  the 
agreement  innnediately  or  at  some  time  in  the  fu- 
ture.   The  offer  may  be  either  express  or  implied. 

An  express  offer  is  one  where  the  terms  of  the 
proposed  agreement  are  presented  in  express  words, 
either  oral  or  written.  An  implied  offer  is  one  im- 
plied from  the  actions  of  the  party  making  the  offer, 
or  from  the  words  which  are  not  sufficient  to  consti- 
tute an  express  offer.  An  implied  offer,  if  accepted, 
is  as  binding  as  an  express  one. 

Important  contracts  arc  in  general  made  as  the 
result  of  express  offers,  but  in  the  vast  majority  of 


22  COMMERCIAL  LAW 

the  minor  every-day  contracts  the  offer  is  an  implied 
one.  To  take  a  simple  and  common  illustration  of 
this  rule ;  the  running  of  the  street-cars  by  the  Street 
Car  Company  is  an  implied  offer  to  carry  any  person 
who  desii-es  to  be  carried  on  the  payment  of  five 
cents  (or  whatever  the  customary  fare  may  be). 

An  offer  once  made  remains  open  for  acceptance 
for  a  reasonable  time  or  until  notice  is  given  of  its 
withdi*awal.  Unless  the  offer  was  made  for  a  valu- 
able consideration,  it  can  be  withdrawn  at  any  time 
before  being  accepted,  even  although  according  to  its 
terms  it  was  to  remain  open  for  a  certain  definite 
time.  An  offer  which  by  its  terms  was  to  remain 
open  for  a  certain  length  of  time  is  terminated  at  the 
end  of  that  time  without  notice.  If  no  time  is  pro- 
vided during  which  the  offer  is  to  remain  open,  it  will 
lapse  at  the  end  of  a  reasonable  time.  What  is  a  rea- 
sonable time  must  be  determined  in  accordance  with 
all  the  facts  and  circumstances  of  the  particular  case, 
and  will  vary  greatly  in  different  cases.  If  an  offer 
is  accepted  before  it  has  lapsed  through  the  expira- 
tion of  the  time  for  which  it  was  made,  or  of  a  rea- 
sonable length  of  time  when  no  time  was  provided, 
the  contract  is  completed  and  the  offeror  is  bound 
thereby,  even  although  he  intended  to  withdraw  the 
offer.  If,  however,  the  person  to  whom  the  offer  was 
made  first  makes  a  coimter  proposition,  and  upon 
this  being  rejected  accepts  the  original  proposition, 
the  person  making  the  offer  is  not  bound  by  the  con- 
tract, unless  he  still  desires  to  make  it;  the  reason  be- 
ing that  the  making  of  the  counter  proposal  was  a 
rejection  of  the  original  proposal. 

For  example,  if  A  offers  to  sell  B  certain  personal 


CONTRACTS  23 

property  for  $25.00,  and  B  thereby  offers  $20.00  for 
it,  and  upon  A  rejecting  this  counter  offer,  B  then 
agrees  to  pay  $25.00,  A,  if  he  chooses,  can  refuse  to 
take  it,  as  the  offer  to  pay  $20.00  was  a  rejection  of 
the  proposal  of  A  to  sell  for  $25.00.  Furthermore,  if 
the  person  to  whom  the  offer  is  made  rejects  it,  he 
cannot  afterwards  accept  it  so  as  to  compel  the  of- 
feror to  stand  by  his  original  proposal. 

Finally,  an  offer  terminates  upon  the  death  or  in- 
sanity of  the  party  making  the  offer.  An  exception 
to  this  last  statement  will  be  found  in  the  case  where 
the  offer  was  for  the  sale  of  property,  and  a  consider- 
ation had  been  given  in  return  for  the  greement  that 
the  offer  should  remain  open  for  a  definite  period. 

Section  13.    Acceptance. 

An  offer  gives  rise  to  a  contract  upon  its  being 
accepted.  Acceptance  must  be  by  the  person  to 
whom  the  offer  was  made.  If,  however,  the  offer  was 
made  to  a  class,  or  to  the  public  generally,  it  can  be 
accepted  by  any  one  of  such  class,  or  by  any  one  of 
the  public.  The  acceptance  must  be  communicated 
to  the  party  making  the  offer  or  their  duly  author- 
ized agent.  In  general,  an  agent  making  an  offer  is 
authorized  to  receive  the  acceptance.  There  may  be 
an  implied  acceptance  as  well  as  an  implied  offer. 
Thus,  if  A  offers  B  a  certain  sum  of  money  if  he  will 
do  a  certain  work,  and  B  does  this  work  within  a  rea- 
sonable time,  this  will  be  an  implied  acceptance  of  the 
offer.  Selling  goods  in  accordance  with  an  order  is 
an  acceptance  of  the  order.  If  a  party  uses  the  mail 
or  telegraph  for  the  transmission  of  his  offer,  he 
makes  the  mail  or  telegraph  his  agent,  and  the  person 


34  COMMERCIAL  LAW 

to  whom  the  offer  was  made  has  the  right  to  use  such 
agency  in  his  acceptance,  and  the  offer  is  accepted, 
and  the  contract  binding,  as  soon  as  the  answer  has 
been  deposited  in  the  mail  or  given  to  the  Telegraph 
Company.  This  is  the  rule,  except  in  Massachusetts, 
where  a  letter  containing  an  acceptance  must  be  re- 
ceived by  the  person  making  the  offer  before  the  con- 
tract is  completed. 

Section  14.    Illegal  Contracts. 

A  contract  must  be  for  an  object  permitted  by 
law.  It  is  very  plain  that  the  law  will  not  enforce  an 
agreement  for  the  accomplishment  of  an  object  which 
the  law  prohibits.  The  most  important  illegal  con- 
tracts are  the  following: 

Agreements  in  restraint  of  trade. 

Sunday  laws. 

Wagers. 

Usury. 

Ultra  vires  agreements. 

Agreements  which  tend  to  prejudice  a  nation  in 
relation  with  other  nations. 

Agreements  which  tend  to  injure  the  public  serv- 
ice. 

Agreements  which  tend  to  increase  litigation. 

Agreements  which  tend  to  obstruct  justice. 

Agreements  which  involve  immorality. 

Agreements  in  restraint  of  marriage. 

Agreements,  lawful  in  themselves,  which  tend  to 
further  an  unlawful  purpose. 

Section  15.    Agreements  in  Restraint  of  Trade. 

Perhaps  that  class  of  illegal  contracts,  concerning 
which  there  has  been  the  greatest  amount  of  litiga- 


CONTRACTS  25 

tion,  are  contracts  in  restraint  of  trade.  The  welfare 
of  any  community  requires  competition  in  all 
branches  of  industry  (except  those  few  in  which  com- 
petition is  impracticable),  and  it  is  against  public 
policy  to  allow  a  man  to  bind  himself  not  to  engage  in 
the  occupation  with  which  he  is  the  most  familiar. 
The  rule  against  agreements  in  restraint  of  trade  is 
not  as  strict  as  it  was  formerly.  At  the  present  time, 
while  an  agreement,  without  limitations  whatever  as 
to  time  or  space,  not  to  carry  on  a  certain  occupation 
is  void,  contracts  not  to  engage  in  a  certain  business 
for  a  certain  period,  within  a  certain  limited  area,  is 
valid.  The  limitations  both  as  to  time  and  space 
must  be  reasonable,  and  what  constitutes  a  reason- 
able limitation  is  a  question  of  fact  depending  upon 
all  the  circumstances  in  the  particular  case,  especially 
upon  the  nature  of  the  business  or  occupation. 

Section  16.    Usurous  Contracts. 

At  one  period  in  the  history  of  English  law,  the 
taking  of  interest  was  prohibited  to  all  persons,  ex- 
cept a  certain  class  in  the  community.  Later,  when 
the  taking  of  interest  by  all  first  began  to  be  allowed, 
limitation  was  placed  upon  the  amount  which  might 
be  charged,  and  any  rate,  upon  which  the  parties 
agreed,  could  be  enforced.  The  third  stage  in  the 
history  of  this  branch  of  the  law  came  when  statutes 
were  passed  in  England,  and  also  in  most  of  the  states 
of  this  country,  fixing  the  maximum  rate  which 
might  be  charged.  A  difference  is  to  be  observed 
between  the  maximum  rate  which  may  be  charged  in 
any  state,  and  what  is  known  as  the  legal  rate  of 
interest,  which  is  the  amount  charj2:ed  on  debts  which 


26  COMMERCIAL  LAW 

bear  interest  where  no  rate  is  fixed  by  agreement. 
The  legal  rate,  the  rate  allowed  by  contract  and  the 
penalties  for  violating  the  law  against  usury  vary 
greatly  in  the  various  states.  In  some  states  the 
penalty  for  violating  the  law  against  usury  is  the  loss 
of  both  principle  and  interest.  In  other  states  the 
loss  of  all  interest,  and  still  others  merely  the  loss  of 
the  interest  above  the  legal  rate.  The  legal  rate  and 
the  highest  lawful  rate  in  the  different  states  and 
territories  is  as  follows: 


States  and  Territories — 

Usurious  contracts. 

Alabama   

Arkansas  

Arizona  

California  

Colorado   

Connecticut 

Delaware 

District  of  Columbia. . 

Florida 

Georgia  

Idaho  

Dlinois 

Indiana  

Iowa 

Kansas 

Kentucky   

Louisiana 

Maine 

Maryland 


I  Eate. 

Eate 

Allowed 

hy  Contract. 

8 

8 

6 

10 

6 

7 
8 
6 

Any  rate 

Any  rate 

Any  rate 

6 

6 

6 

6 

10 

8 

10 

8 

8 

7 

12 

5 

7 

6 

8 

6 

8 

6 

10 

6 

6 

5 

8 

6 
6 

Any  rate 
6 

CONTEACTS  27 

Rate 
Allowed 
States  and  Territories..  Legal  Rate.  by  Contract. 

Massachusetts   6  Any  rate 

Michigan 5  7 

Minnesota 7  10 

Alississippi  6  10 

Missouri   6  8 

Montana   8  Any  rate 

Nebraska 7  10 

Nevada    7  Any  rate 

New  Hampshire 6  6 

New  Jersey 6  6 

New  Mexico 6  12 

New  York 6  6 

North  Carolina 6  6 

North  Dakota 7  12 

Ohio  6  8 

Oklahoma  7  12 

Oregon 6  10 

Pennsylvania 6  6 

Rhode  Island 6  Any  rate 

South  Carolina 7  8 

South  Dakota 7  12 

Tennessee  6  6 

Texas 6  10 

Utah 8  Any  rate 

Vermont   6  6 

Virginia 6  6 

Washington   6  12 

West  Vu'ginia 6  6 

Wisconsin 6  10 

Wyoming   8  12 


38  '  COMMEECIAL  LAW 

Penalties  for  usury  differ  in  the  various  states. 

The  states  of  Arizona,  California,  Colorado, 
Maine,  Massachusetts  (except  on  loans  of  less  than 
$1,000),  Montana,  Nevada,  Rhode  Island,  Utah,  and 
Wyoming  have  no  provisions  on  the  subject. 

Loss  of  principal  and  interest  is  the  penalty  in  Ar- 
kansas and  New  York. 

Loss  of  principal  in  Delaware  and  Oregon. 

Loss  of  interest  in  Alabama,  Alaska,  District  of 
Columbia,  Florida,  Idaho,  Illinois,  Iowa,  Louisiana, 
Michigan,  Minnesota,  Mississippi,  Nebraska,  New 
Jersey,  North  Carolina  (double  amount  if  paid), 
North  Dakota  (double  amount  if  paid),  Oklahoma 
Territory,  South  Carolina,  South  Dakota,  Texas, 
Virginia,  Washington  (double  amount  if  paid),  Wis- 
consin, and  Hawaii. 

Loss  of  excess  of  interest  in  Connecticut,  Georgia, 
Indiana,  Kansas,  Kentucky,  Maryland,  Missom-i, 
New  Hampshire  (three  times),  New  Mexico,  Ohio, 
Pennsylvania,  Tennessee,  Vermont,  and  West  Vir- 
ginia. 

Usury  laws  do  not  apply  to  the  loan  of  chattels, 
nor  according  to  the  weight  of  authority  is  it  usury 
to  charge  compound  interest,  or  bank-discount.^ 

Section  17.    Contracts  Illegal  Because  of  Their  Ef- 
fect on  the  Government. 

Several  classes  of  contracts  are  held  to  be  illegal, 
or  against  public  policy,  because  of  their  prejudicial 
effect  upon  the  government  of  the  state  or  nation. 
Under  this  head  are  included  agreements  which  tend 
to  prejudice  a  nation  in  its  relation  with  other  na- 

*S«e  volume  on  Currency,  Banking  and  Exchange,  §  60. 


CONTRACTS  29 

tions;  agreements  which  tend  to  injure  the  public 
service;  agreements  which  tend  to  obstruct  justice; 
and  agreements  which  tend  to  increase  litigation. 

The  last  class  mentioned  was  formerly  of  much 
greater  importance  than  at  the  present  time.  Among 
the  contracts  fonnerly  prohibited  as  coming  under 
this  head,  but  now  permitted,  are  the  assignment  of 
a  chose  in  action,  and  the  agreement  of  the  lawyer  to 
take  a  case  on  a  contingent  basis. 

Section  18.    Gambling  Contracts. 

Gambling  contracts  were  originally  perfectly 
valid  under  the  Common  Law,  and  were  enforced  to 
the  same  extent  as  any  other  contract.  The  agree- 
ment of  one  party  to  the  contract  to  do  a  certain 
thing  if  a  certain  event  took  place  was  considered 
a  valuable  consideration  for  the  agreement  of  the 
other  to  do  a  certain  thing  if  the  said  event  did  not 
take  place. 

Finally,  the  courts  began  to  appreciate  the  de- 
moralizing influence  of  this  class  of  contracts,  and 
began  to  seek  reasons  for  refusing  to  enforce  them. 
Under  the  Common  Law,  however,  the  judges  could 
only  refuse  to  enforce  such  contracts  on  account  of 
some  peculiar  feature  of  the  case.  Later,  gambling 
contracts  and  wages  were  prohibited  by  statute. 

In  nearly  all  the  states  of  this  country  there  are 
now  statutes  regulating  this  subject,  although  in  a 
few  states  the  courts  have  held  such  contracts  to  be 
void  as  against  public  policy,  even  in  the  absence  of 
statutory  provisions. 


30  COMMEECIAL  LAW 

Section  19.    Other  Illegal  Contracts. 

Under  the  Common  Law,  contracts  made  on  Sun- 
day are  valid.  But  in  many  states  they  have  been 
made  invalid  by  statute.  The  question  is  now  a  statu- 
tory one  in  this  country,  such  contracts  being  valid 
in  the  absence  of  any  statutory  provisions.  Sunday 
laws  have  unifoiTnly  been  held  to  be  constitutional, 
and  not  to  be  an  illegal  interference  with  the  religious 
liberty  of  the  people. 

The  law  seeks  to  encourage  mamage,  and  any 
contract  or  agreement  in  total  restraint  of  a  first 
marriage,  or  imposing  an  unreasonable  restraint  up- 
on the  same,  are  held  invalid.  Reasonable  restraints, 
such  as  the  prohibiting  of  a  marriage  with  a  certain 
person  or  with  a  member  of  a  certain  nationality,  are 
valid,  as  are  also  agreements  against  a  second  mar- 
riage. Marriage  brokerage  contracts  are  always 
void. 

Contracts  between  husband  and  wife  for  a  pres- 
ent separation  are  valid,  but  not  one  for  a  future  sep- 
aration. 

All  contracts  for  performance  of  immoral  acts  or 
anything  which  would  aid  in  the  performance  of  such 
immoral  acts  are  universally  held  void. 

Section  20.  Agreements  Lawful  in  Themselves  to 
Further  an  Unlawful  Purpose;  and  Agreements 
Illegal  Only  in  Part. 

Any  contract  or  agreement  made  with  the  object 
of  fiu-thering  an  unlawful  purpose,  even  although  the 
contract  in  itself  is  lawful,  is  illegal. 

An  illustration  of  this  would  be  in  the  case  of  tho 


CONTRACTS  31 

purchase  of  property  to  be  used  in  the  commission 
of  crime. 

In  the  case  of  agreements  partly  legal,  and  partly 
illegal,  if  the  contract  is  capable  of  being  separated, 
the  legal  portion  is  valid,  and  the  illegal  portion  void. 
If  the  contract  is  inseparable,  the  whole  contract  is 
void. 

Section  21.    Consideration. 

Consideration  is  the  thing  or  act  of  value  given  to, 
or  done  for,  one  party  to  a  contract,  or  promise  made 
to  him  at  his  request,  either  express  or  implied,  in 
return  for  the  thing  given,  act  done,  or  promise  made 
on  his  part. 

Under  the  early  Common  Law,  a  consideration 
was  not  necessary  for  the  validity  of  a  contract.  A 
consideration  was  first  required  in  those  contracts 
which  were  enforced  by  the  action  of  assumpsit.  As 
a  scope  of  this  action  was  extended  and  it  became 
the  principal  action  ex  contractu,  the  cases  in  w^hich 
a  consideration  was  required  were  also  extended. 

At  the  present  time,  a  consideration  is  required 
in  all  contracts  except  those  under  seal.  By  some 
authors,  and  in  some  decisions,  it  is  stated  that  the 
seal  is.  evidence  of  a  consideration,  but  the  correct 
view  is  that  a  promise  under  seal  requires  no 
consideration. 

The  various  foi-ms  which  a  valid  consideration 
may  take,  are  thus  outlined  by  Mr.  Street  in  his 
work  on  "Foundations  of  Legal  Liability'': 

"With  the  death  of  Elizabeth  (1603)  the  forma- 
tive period  in  the  history  of  consideration  came  to  a 
close  and  English  contract  law  was  ready  to  enter 


33  COMMERCIAL  LAW 

upon  its  modern  career.  It  will  be  noted  that  sev- 
eral forms  of  consideration  had  now  appeared.  First 
in  importance  is  that  detriment  to  the  promisee 
(1505)  which  is  necessary  to  give  validity  to  the 
simple  imilateral  promise.  This  is  the  original  form 
of  the  assmnptual  consideration,  and  is  the  type 
which  all  other  forms  of  consideration  are  commonly 
but  erroneously  supposed  to  be  resolvable.  Next  in 
importance  is  the  consideration  of  mutual  promises. 
(1588)  Least  notable  of  the  three  different  types  of 
the  assumptual  consideration  is  the  consideration  of 
legal  duty  or  precedent  debt  (Cir.  1550) . 

It  is  not  possible  by  any  valid  process  to  resolve 
these  different  sorts  of  consideration  into  one.  No 
present  detriment  to  the  promisee  is  found  either  in 
the  consideration  of  legal  duty  or  in  mutual  prom- 
ises. In  the  one  case  the  detriment  is  past,  having 
been  incurred  when  the  debt  was  created.  In  the 
other  there  is  a  contemplated  detriment  to  both  par- 
ties, i.  e.,  future  performance  of  the  respective  prom- 
ises; but  the  contract  is  valid  from  the  time  the 
mutual  promises  are  made.  It  is  indispensable  that 
consideration  in  the  sense  of  detriment  should  concur 
with  the  promise. 

Of  the  recompense,  or  benefit,  to  the  grantor  of 
real  property,  which  is  necessary  to  pass  the  use  in 
equity  to  a  stranger;  and  of  love  and  affection,  which 
is  sufficient  to  support  a  covenant  to  stand  seized  to 
the  use  of  one  closely  related  by  blood  or  marriage, 
we  take  no  further  account,  as  these  are  not  assump- 
tual considerations.*' 

A  mere  benefit  to  the  promisor,  where  there  are 
no  mutual  promises  and  no  detriment  to  the  prom- 


CONTRACTS  33 

isee,  is  not  a  sufficient  consideration  to  support  the 
promise. 

Mutual  promises  will  always  constitute  mutual 
considerations.  In  such  cases,  the  promise  by  one 
party  is  the  consideration  for  the  promise  by  the 
other.  This  is  one  of  the  most  common  forms  which 
the  consideration  takes  in  modern  contracts. 

Forbearance  to  exercise  a  legal  right  is  also  a  good 
consideration  for  a  promise,  but  a  promise  to  do 
something  which  a  person  is  already  legally  bound  to 
do,  or  to  forbear  to  do  something  which  the  party  has 
no  right  to  do,  is  not  a  consideration  and  will  not  sup- 
port a  promise,  or  an  action,  on  the  part  of  another 
person. 

The  pajTtnent  of  a  portion  of  an  undisputed  debt 
is  not  a  good  consideration  for  a  receipt  in  full.  Even 
if  a  receipt  in  full  is  given  the  payment  only  dis- 
charges the  debt  pro  tanto.  A  part  pajonent  in 
money  and  some  other  article  of  personal  property, 
no  matter  how  small  its  value,  may  be  accepted  in 
full  settlement,  or  the  creditor  may  make  a  gift  of 
the  part  unpaid,  or  give  a  release  under  seal  in  full 
settlement.  In  case  of  dispute  as  to  the  amount  due, 
a  compromise  settlement  will  be  valid,  the  conces- 
sions on  each  side  being  mutual  considerations  for 
tlie  concessions  on  the  other.  Furthermore,  the  law 
favors  the  settlement  of  disputes  in  order  to  avoid 
unnecessary  litigation. 

Maniage  is  a  valuable  consideration  and  will  up- 
hold any  promise  made  in  consideration  thereof.  A 
moral  obligation  is  never  sufficient  consideration  for 
a  promise.  In  this  respect  the  Common  law  differs 
from  the  law  of  those  countries  which  have  adopted 


34  OOMMBRCIAL  LAW 

their  legal  systems  from  the  Roman  or  Civil  law. 
If  the  consideration  for  a  promise  wholly  fails,  then 
the  promise  is  one  without  consideration,  and  is  void. 

Section  22.    Required  Formalities  in  Making  a 
Contract. 

In  the  making  of  a  contract  all  the  formalities 
required  by  the  law  of  the  place  where  the  contract 
is  made  must  be  strictly  followed.  The  most  impor- 
tant provision  of  this  character  are  those  requiring 
certain  contracts  to  be  in  writing. 

Section  23.    Statute  of  Frauds. 

The  term  "Statute  of  Frauds"  is  the  name  gen- 
erally applied  to  those  statutes,  existing  in  England 
and  the  different  states,  requiring  contracts  on  cer- 
tain subjects  to  be  in  writing.  The  original  statute 
of  frauds  was  entitled  ''An  Act  for  the  Prevention 
of  Frauds  and  Perjuries,"  and  w^as  enacted  in  1676 
to  take  effect  in  1677.  The  purpose  of  this  act  was 
thus  set  out  in  its  opening  sentences:  "For  preven- 
tion of  any  fraudulent  practices,  which  are  com- 
monly endeavored  to  be  upheld  by  perjury  and  sub- 
ornation of  perjury."  From  this  arose  its  name,  the 
reason  for  which  is  not  always  perceived  by  the 
beginner  in  law. 

The  provisions  of  the  original  statute  were  very 
numerous,  but  only  two  sections,  the  fourth  and  the 
seventeenth,  have  been  at  all  generally  re-adopted 
in  the  statutes  in  this  country. 

The  wording  of  these  two  sections  is  as  follows: 

"And  be  it  further  enacted  by  the  authority 
aforesaid,  That  from  and  after  the  said  four  and 


CONTRACTS  35 

twentieth  day  of  June  no  action  shall  be  brought 
whereb}^  to  charge  any  executor  or  administrator 
upon  any  special  promise,  to  answer  damages  out  of 
him  own  estate;  (2)  or  whereby  to  charge  the  de- 
fendant upon  any  special  promise  to  answer  for  the 
debt,  default  or  miscarriages  of  another  person;  (3) 
or  to  charge  any  person  upon  any  agreement  made 
upon  consideration  of  marriage;  (4)  or  upon  any 
contract  or  sale  of  lands,  tenements,  or  heredita- 
ments, or  any  interest  in  or  concerning  them;  (5) 
or  upon  any  agreement  that  is  not  to  be  performed 
within  the  space  of  one  year  from  the  making  there- 
of; unless  the  agreement  upon  which  such  action 
shall  be  brought,  or  some  memorandum  or  note  there- 
of, shall  be  in  writing,  and  signed  by  the  party  to 
be  charged  therewith,  or  some  other  person  there- 
unto by  him  lawfully  authorized."    *     *    * 

''No  contract  for  the  sale  of  any  goods,  wares  or 
merchandise,  for  the  price  of  ten  pounds  sterling  or 
upwards,  shall  be  allowed  to  be  good;  except  the 
bu3^er  shall  accept  part  of  the  goods  so  sold,  and  act- 
ually receive  the  same,  or,  give  something  in  earnest 
to  bind  the  bargain,  or  in  part  of  pa3Tnent,  or  that 
some  note  or  memorandum  in  writing  be  made  and 
signed  by  the  parties  to  be  charged  by  such  contract, 
or  their  agents  thereunto  lawfully  authorized." 

Practically  all  the  states  in  this  country  have 
adopted  the  Fourth  Section  substantially,  as  here 
given,  but  some  of  the  states,  as,  for  example,  Illinois, 
have  omitted  the  Seventeenth  Section.  There  is  an 
important  difference  in  the  wording  of  the  statute  in 
some  of  the  states.  The  English  statute,  and  that  in 
most  of  the  states,  provides  that  no  action  shall  be 


36  COMMEECIAL  LAW 

brought  in  any  case  mentioned  unless  the  contract  is 
in  writing,  while  in  the  other  states  it  is  provided 
that  the  contracts  shall  be  void  unless  in  writing. 
The  distinction  is  at  times  an  important  one. 

The  provisions  as  to  promises  by  executors  and 
administrators  only  apply  to  promises  by  executors 
and  administrators  to  personally  pay  the  debts  of 
the  decedent,  and  does  not  apply  to  promises  to  pay 
expenses  of  administration,  nor  promises  properly 
made  in  a  representative,  instead  of  a  personal, 
capacity. 

The  provision  as  to  promises  to  answer  for  the 
debt,  default  or  miscarriage  of  another  are  held  to  ap- 
ply only  in  cases  where  the  promisor  w^as  to  become 
secondarily  liable.  If  the  credit  is  given  directly  to 
the  promisor,  even  although  the  benefit  accrues  to  a 
third  person,  an  oral  promise  is  binding.  The  test  is 
whether  or  not  the  person  receiving  the  benefit  him- 
self remains  liable  for  the  debt.  Agreements  made 
in  consideration  of  marriage,  do  not  include  actual 
promises  of  marriage.  Promises  to  a  person,  if  they 
will  marry  a  certain  person,  have  been  held  to  fall 
within  the  scope  of  this  statute. 

The  provisions  of  the  Fourth  Section  relative  to 
the  sale  of  lands,  tenements  and  hereditaments,  are 
given  a  very  broad  meaning  and  apply  not  only  to 
such  transactions  relating  to  freeholds,  but  also  to 
those  affecting  smaller  interests.  In  the  statutes  of 
many  of  the  states,  as  well  as  in  the  original  statute, 
aU  interests  for  less  than  a  certain  term  (generally 
one  or  three  years)  are  excepted  from  the  operation 
of  the  statute. 

The  pro^dsions  as  to  agreements  not  to  be  per- 


CONTRACTS  37 

formed  within  one  year,  apply  only  to  such  perform- 
ances as  can  by  no  possibility  be  performed  within 
such  time.  If  there  is  the  slightest  possibility  that 
the  contract  may  be  completed  within  this  period, 
the  statute  does  not  apply.  For  example,  a  promise 
to  furnish  a  person  with  board  for  thirteen  months, 
would  fall  within  the  statute,  while  a  promise  to  fur- 
nish the  same  person  with  board  for  life  would  not 
fall  within  the  statute,  even  although  the  expectancy 
of  life  of  such  a  person  might  be  a  large  number  of 
years. 

There  is  some  ground  for  uncertainty  as  to  just 
what  class  of  property  should  be  held  to  be  included 
under  the  provisions  of  the  Seventeenth  Section.  In 
general,  a  broad  interpretation  will  be  given  and  all 
species  of  personal  property  included. 

Promissory  notes,  bonds,  other  choses  in  action, 
and  corporate  stock  are  generally  held  to  be  within 
the  statute  in  the  United  States,  but  not  in  England. 
An  acceptance  and  receipt  of  part  of  the  goods  takes 
the  contract  out  of  the  statute. 

The  payment  of  earnest  money  also  takes  the 
transaction  out  of  the  operation  of  the  statute.  Such 
earnest  money  may  be  paid  either  at  the  time  the 
contract  was  entered  into,  or  afterwards. 

Section  24.    Operation  of  the  Contract. 

The  general  rule  is  that  a  contract  can  confer 
rights  or  impose  liabilities  upon  a  person  who  is  a 
party  to  the  contract.  There  are  a  few  exceptions, 
however.  Contracts  made  by  agents  furnish  ap- 
parent, but  not  real,  exceptions.     If  a  person  pur- 


38  COMMERCIAL  LAW 

chases  property  with  money  belonging  to  another, 
there  will  be  a  resulting  trust  created  in  favor  of  the 
rightful  owner  of  the  money,  and  if  a  person  conveys 
property  to  any  person  directing  that  he  should  hold 
the  same  for  the  benefit  of  a  third  person,  the  person 
to  whom  the  property  was  transferred  becomes  a 
trustee  for  the  benefit  of  such  third  person,  even 
although  he  never  agreed  to  the  transfer  nor  to  act  as 
trustee.^ 

Again,  **The  bargain  between  the  parties  may  be, 
that  one  of  them  shall  confer  a  benefit  on  a  third  per- 
son. And,  if  the  consideration  for  it  is  adequate, 
the  consequence  does  not  depend  on  the  motive;  as, 
whether  it  w^as  to  do  a  favor  to  the  third  person,  or 
was  an  arrangement  of  convenience  to  the  parties. 
Nor  is  it  material  in  whose  name  the  rules  of  practice 
requii'e  the  action  to  be  brought  as,  whether  at  law 
by  one  party  against  the  other,  or  at  law,  by  the  third 
person  against  the  party  promising,  or  by  a  suit  in 
equity.  The  third  person  has  open  to  him  the  one 
of  these  three  methods  which  the  particular  facts 
and  the  practice  of  the  court  may  indicate."^ 

In  the  case  of  a  joint  contract,  the  promise  is  that 
of  all  the  parties  together,  and  if  suit  is  brought,  it 
must  be  brought  against  all  of  the  parties  of  the  con- 
tract who  are  living.  A  failure  in  this  respect  is 
fatal. 

A  joint  and  several  contract  is  one  w^hich  is  the 
promise  not  only  of  the  parties  jointly,  but  also  of 
each  of  the  several  parties  individually.  The  party 
with  whom  such  contract  is  made  may  sue  all  the 

*See  Sections  on  Trusts. 
•Bishop  on  Contracts,  2d  Ed. 


CONTRACTS  39 

parties  or  any  one  of  them,  but  he  cannot  sue  more 
than  one  and  less  than  all. 

Section  25.    Assignment  of  Contracts. 

The  general  rule  is  that  any  contract  can  be  as- 
signed except  one  which  is  entered  into  on  account 
of  special  confidence  in  the  skill  or  integrity  of  the 
other  party.  Thus,  a  contract  to  deliver  one  thou- 
sand bushels  of  wheat  can  be  assigned,  but  a  contract 
to  paint  a  picture  or  defend  a  lawsuit  can  not. 

Formerly  the  common  law  was  very  strict  against 
allowing  the  assignment  of  a  chose  in  action  so  as  to 
permit  the  assignee  to  bring  suit  thereon. 

This  rule  has  been  very  greatly  changed,  but  in 
some  states  it  is  still  necessary  for  the  assignee  to 
bring  suit  in  the  name  of  the  assignor. 

Section  26.    Interpretation  and  Construction  of 
Contracts. 

The  terms  *' interpretation"  and  "construction" 
are  often  used  interchangeably,  but  nevertheless 
there  is  a  clearly  defined  distinction. 

''Interpretation  differs  from  construction  in  that 
the  former  is  the  art  of  finding  out  the  true  sense  of 
any  form  of  words;  that  is,  the  sense  which  their 
author  intended  to  convey,  and  of  enabling  others  to 
derive  fi'om  them  the  same  idea  which  the  author 
intended  to  convey.  Construction,  on  the  other  hand, 
is  the  drawing  of  conclusions,  respecting  subjects 
that  lie  beyond  the  direct  expressions  of  the  text, 
from  elements  known  from  and  given  in  the  text; 
conclusions  which  are  in  the  spirit,  though  not 
within  the  letter,  of  the  text.    Interpretation  only 


40  COMMERCIAL  LAW 

takes  place  if  the  text  conveys  some  meaning  or 
other.  "^ 

The  first  and  most  important  principle  to  be  ap- 
plied in  the  interpretation  and  construction  of  con- 
tracts is  that  the  intention  of  the  parties  is  to  be  car- 
ried out,  and  if  this  can  be  ascertained,  it  will  govern, 
even  although  some  changes  have  to  be  made  in  the 
meaning  which  would  follow  from  a  strict  reading 
of  the  contract.  This  principle,  however,  must  not 
be  carried  too  far.  The  courts  must  interpret  the 
contract  according  to  what  the  parties  have  actually- 
said,  and  can  not  make  a  new  contract  for  them. 

In  construing  a  contract,  the  whole  contract  is 
to  be  construed  together.  Outside  evidence  may  be 
admitted  to  explain  a  latent  ambiguity  in  the  con- 
tract, but  not  a  patent  ambiguity.  In  construing  a 
contract,  the  presmnption  is  in  favor  both  of  its 
validity  and  its  legality,  and  in  the  case  of  two  pos- 
sible constructions,  that  will  be  adopted  which  will 
uphold  the  contract.  In  case  of  doubt,  the  words 
will  be  construed  most  strongly  against  the  party 
using  them. 

In  case  of  a  contract  which  consists  partly  of 
written  words  and  partly  of  printed  words,  the  writ- 
ten words  will  prevail  over  the  printed,  as  having 
probably  been  more  carefully  considered  by  the  par- 
ties, and  as  more  exactly  indicating  their  intentions. 

Section  27.    Conditional  Contracts. 

A  conditional  contract  is  one  which  goes  into 
effect  or  is  terminated  by  the  happening,  or  not  hap- 

*L:eber,  Hermeneties,  11,  43,  44. 


CONTRACTS  41 

pening,  of  a  certain  event.    Conditions  in  a  contract 
ai^e  of  three  kinds : 

(1)  Conditions  precedent, 

(2)  Conditions  concurrent, 

(3)  Conditions  subsequent. 

Conditions  precedent  are  those  which  must  be 
performed  before  the  rights  of  the  party  who  is  to 
perform  the  conditions  arise. 

Conditions  concurrent  are  those  where  a  certain 
thing  must  be  performed  by  each  party  to  the  con- 
tract simultaneously. 

Conditions  subsequent  are  those,  the  breach  of 
which  will  terminate  the  liabilities  under  a  contract 
of  the  person  for  whose  benefit  the  condition  subse- 
quent was  inserted,  or  terminate  the  rights  of  the 
other  party  to  said  contract. 

Section  28.    Certain  Defenses  to  a  Contract. 

Among  the  special  defenses  to  suits  to  compel  the 
performance  of  a  contract,  or  recover  damages  for 
its  breach,  are  mistake,  fraud,  duress,  and  undue 
Influence. 

All  of  these  defenses  arise  out  of  the  underhdng 
fundamental  principles;  that  there  can  be  no  con- 
tract without  "a  meeting  of  the  minds." 

In  the  case  of  mistake,  the  minds  of  the  parties 
have  not  met,  and  without  any  wrongdoing  on  either 
side,  the  agreement  fails  to  represent  what  they 
agreed  upon.  In  order  for  a  mistake  to  constitute 
a  valid  defense,  it  must  be  mutual,  or,  there  must 
be  mistake  on  one  side  coupled  with  fraud  on  the 
other.  Furthermore,  the  only  kind  of  mistake  which 
is  a  valid  defense  is  a  mistake  of  fact.    Mistake  of 


42  COMMERCIAL  LAW 

law  is  never  a  defense,  as  everyone  is  supposed  and 
bound  to  know  the  law. 

There  are  three  apparent  exceptions  to  this  rule; 
the  following  being  considered  as  mistakes  of  fact 
rather  than  as  mistakes  of  law;  (1)  Mistakes  as  to 
foreign  law;  (2)  mistakes  as  to  private  statutes; 
(3)  mistakes  of  fact  which  are  in  their  turn  occa- 
sioned by  mistakes  of  law.  Money  paid  under  a 
mistake  of  law  can  not  be  recovered  back.  Money 
paid  under  a  mistake  of  fact  can  be  recovered  back. 

Mistake  renders  a  contract  void,  while  fraud, 
duress,  and  undue  influence  only  render  it  voidable. 

In  order  for  fraud  to  be  a  defense,  there  must  be 
present  those  elements  required  to  sustain  an  action 
in  tort  for  deceit.^ 

*' Duress  considered  as  a  ground  for  avoiding  a 
contract  consists  in  any  of  the  following  acts  com- 
mitted or  threatened  by  one  of  the  parties,  or  with 
his  connivance,  and  causing  the  other  to  enter  into 
the  contract:  (1)  Unlawful  imprisonment  of  the 
other  party;  (2)  imprisonment  of  the  other  party 
through  the  abuse  of  lawful  process  or  made  unjustly 
oppressive;  (3)  imprisonment  of  the  husband  or  wife, 
parent  or  child  or  other  near  relative  of  the  other 
party;  (4)  unlawful  and  great  bodily  harm  to  the 
other  party  or  his  near  relative ;  (5)  unlawful  seizure, 
detention  or  destruction  of  the  property  of  such 
person."* 

Undue  influence  arises  wherever  a  person  who 
stands  in  a  fiduciary  position  or  who  is  greatly 
trusted  by  the  person  with  whom  he  contracts,  uses 
such  position  of  trust  to  unduly  influence  this  person 

*  Benjamin  on  Sales,  Sec.  60. 


CONTRACTS  43 

for  his  own  selfish  interests.  This  defense  can  most 
generally  be  sustained  where  a  person  thus  influenced 
is  of  weak  intellect  on  account  of  age  or  other 
reasons. 

Section  29.    Discharge  of  Contracts. 

A  contract  may  be  discharged  in  a  number  of 
ways: 

(a)  By  its  performance  according  to  the  terms 
of  the  contract.  This  is  the  simplest  and  clearest 
of  all  methods  of  discharge ; 

(b)  By  a  new  contract  or  agreement  between 
the  parties.  This  new  arrangement  may  either  take 
the  form  of  mutual  releases  or  the  substitution  of  a 
new  contract; 

(c)  If  one  party  to  a  contract  repudiates  it,  or 
renders  it  impossible  for  the  other  party  to  perform 
it,  such  second  party  is  released  from  all  liability 
therein.  The  same  effect  will  result  from  the  inten- 
tional alteration  of  a  material  portion  of  a  written 
contract  by  one  party  to  the  contract; 

(d)  The  death  of  either  party  to  the  contract 
will  terminate  all  contracts  of  a  special  character. 
Contracts  involving  only  property  rights  generally 
continue  after  the  deatK  of  the  party,  and  bind  their 
estate; 

(e)  Certain  contracts  will  be  discharged  by 
bankruptcy.  For  a  discussion  of  this  point,  see 
Chapter  on  Bankruptcy;® 

(f )  If  a  judgment  is  obtained  upon  a  contract, 
all  the  rights  arising  out  of  this  contract  wiU  be 
merged  in  the  judgment; 

•  9ee  Chapter  XIV. 


44  COMMERCIAL  LAW 

^g)  By  lapse  of  time.  In  every  state  there  are 
statutes  known  as  *' Statutes  of  Limitations,"  which 
provide  that  no  action  shall  be  brought  on  any  claim 
unless  such  action  is  brought  within  a  certain  tim-e 
after  the  cause  of  action  accrues.  If  a  part  payment 
of  a  debt  is  made,  or  a  new  promise  to  pay  the  debt 
is  made,  the  statute  will  only  begin  to  run  from  this 
time,  even  if  the  fuU  period  has  already  run  and  the 
debt  had  become  what  is  known  as  outlawed.  A  new 
promise  or  partial  payment  will  revive  the  debt.  In 
most  states,  the  statute  of  limitations  does  not  run 
against  infants  or  other  persons  under  disability. 

The  Statutes  of  Limitations  of  the  different  states 
are  as  follows: 

Judgments, 
states  and  Territories —         Years. 

Alabama 20 

Arkansas   10 

Arizona 5 

California 5 

Colorado 20 

Connecticut   (o) 

Delaware    10 

District  of  Columbia .  12 

Florida  20 

Georgia 7 

Idaho 6 

Illinois    20 

Indiana 20 

Iowa  20(d) 

Kansas  5 

Kentuckv 15 


Notes, 
Years. 

Open 

Accounts, 

Years. 

6 

3 

5 

3 

4 

3 

4 

2 

6 

6 

(e) 
6 

6 

3 

3 

3 

5 
6 
5 

2 
4 
4 

10 

5 

10 

6 

10 

5 

5 

3 

15 

5(a) 

states  and  Territories 

Louisiana 

Maine   

Maryland 

Massachusetts 

Michigan    

Minnesota    

Mississippi 

Missouri 

Montana 

Nebraska   

Nevada  

New  Hampshire .... 

New  Jersey 

New  Mexico 

New  York 

North  Carolina 

North  Dakota 

Ohio    

Oklahoma 

Oregon   

Pennsylvania 

Rhode  Island 

South  Carolina 

South  Dakota 

Tennessee 

Texas  

Utah   

Vermont 

Virfjinia 

Washington 


CONTRACTS 

Judgments, 
! —           Years. 

10 

Notes, 
Years. 

6(e) 

3 

6 

6 

6 

6 
10 

8 

5 

4 

6 

6 

6 

6 

3* 

6 
15 

5 

6 

6 

6 

6 

6 

6 

4 

6 

6 

5* 

6 

Open 

Accounts, 

Years. 

3 

20 

3 

12 

20 
10 

6 
6 

10 

6 

7 

3 

10 

5 

.         10(b) 
5? 

5 

4 

6 

4 

20 

20 

6 
6 

7 
20(n) 
10 
10 

.         15(p) 
5(h) 
10 

4 

3 

6§§ 
6 

3 

6 

5(f) 
20 
20 

•         10(1) 
10? 

6 
6 
6 
6 
6 

10 

2 

8 

4 

8 

6§§ 

2 

3 

20 

6 

45 


46  COMMEECIAL  LAW 

Open 
Judgments,        Notes,         Accounts, 
States  and  Territories —  Years.  Years.  Years. 

West  Virginia 10  10  5 

Wisconsin   20(n)  6  6 

Wyoming 21  5  8 

*  Under  seal,  10  years,  t  If  made  in  state;  if  outside,  2  years.  §  Un- 
less a  different  rate  is  expressly  stipulated.  \\  Under  seal,  20  years. 
jl  Store  accounts;  other  accounts,  3  years;  accounts  between  merchants,  5 
years.  ttNew  York  has  by  a  recent  law  legalized  any  rate  of  interest  on 
call  loans  of  $5,000  or  upward,  on  collateral  security.  ^Becomes  dormant, 
but  may  be  revived.  §§  Six  years  from  last  item,  (a)  Accounts  between 
merchants,  2  years,  (c)  Witnessed,  20  years,  (d)  Twenty  years  in 
Courts  of  Record;  in  Juetice's  Courts,  10  years,  (e)  Negotiable  notes,  6 
years;  non-negotiable,  7  years,  (f)  Ceases  to  be  a  lien  after  that  period, 
(h)  On  foreign  judgments,  1  year,  (i)  Is  a  lien  on  real  estate  for  only 
10  years,  (k)  And  indefinitely  by  having  execution  issue  every  5  years. 
(1)  Ten  years  foreign,  twenty  years  domestic,  (n)  Not  of  record,  6  years, 
(o)  No  limit,     (p)  Foreign,  domestic  6  years. 

Section  30.    Quasi  Contracts. 

A  quasi  contract  is  an  obligation  imposed  by  law 
for  the  purpose  of  doing  justice  between  the  parties. 
The  term  quasi  contract  is  used  because  the  obliga- 
tion imposed  is  similar  in  its  nature  to  an  obligation 
arising  from  a  contract  and  because  these  obligations 
are  enforced  by  actions  ex  contractu.  A  quasi  con- 
tract differs  from  an  implied  contract  in  that  in  the 
case  of  implied  contracts  the  law  presumes  from  the 
actions  of  the  parties  that  they  intended  to  contract, 
while  it  is  evident  in  the  case  of  quasi  contracts  that 
it  is  impossible  for  the  parties  to  have  contracted. 

An  illustration  of  quasi  contracts  is  found  in  the 
cases  where  a  person  is  under  a  moral  and  legal  obli- 
gation to  do  an  act  and  another  does  it  for  him  under 
such  circumstances  of  urgent  necessity  that  admit 


CONTRACTS  47 

of  no  delay,  the  law  will  imply  the  promise  to  pay 
mthout  the  proof  of  the  actual  promise.  Where  a 
person  has  money  in  his  possession  rightfully  be- 
longing to  another,  an  action  may  be  had  to  recover 
such  money  without  the  proof  of  any  promise  to  pay. 
When  a  person  pays  money  for  another  at  his  re- 
quest, he  is  entitled  to  reimbursement  without  proof 
of  promise  to  reimburse. 

Where  goods  are  sold  and  delivered  to  another, 
without  any  express  agreement  as  to  the  price  to  be 
paid  for  them,  the  law  presumes  a  promise  to  pay 
what  they  are  reasonably  worth.  This  is,  in  reality, 
an  implied  contract,  rather  than  a  quasi  contract. 

Other  illustration  of  quasi  contracts  are  found  in 
suits  for  use  and  occupation  where  there  was  no 
promise  to  pay  rent,  and  in  some  cases  where  the  tort 
is  waived  and  the  suit  brought  in  assumpsit. 

Section  31.    Situs  of  Contracts. 

By  ''situs"  is  meant  location  or  situation.  The 
situs  of  a  contract  is  important,  as  it  will  determine 
the  law  which  is  to  be  used  in  the  determination  of 
questions  affecting  the  contract.  There  is  not  neces- 
sarily a  single  situs  for  a  contract;  each  of  the  differ- 
ent elements  of  the  contract  may  have  a  different 
situs. 

The  place  where  the  contract  was  entered  into  is 
called  the  ''locus  celebrationis,"  and  all  questions 
relative  to  the  making  of  the  contract,  the  capacity 
of  the  parties  to  the  contract,  the  formal  validity  of 
the  contract,  etc.,  will  be  determined  by  the  law  of 
this  place,  or  the  "lex  celebrationis." 

The  "lex  solutionis"  or  the  law  of  the  place 


48  COMMERCIAL  LAW 

where  the  contract  is  to  be  performed,  will  govern  all 
matters  relating  to  the  performance  of  the  contract, 
and  similarly,  the  "lex  considerationis,"  or  the  law  of 
the  place  w^here  the  consideration  is  to  be  paid,  will 
govern  all  matter  relative  to  the  consideration.  (It 
is  to  be  noticed  in  this  connection  that  the  ''perform- 
ance" and  the  ** consideration"  are  here  interchange- 
able terms,  the  performance  on  the  one  side  being  the 
consideration  for  the  performance  on  the  other  and 
vice  versa.) 

All  questions  pertaining  to  the  remedy  will  be 
governed  by  the  *'lex  fori"  or  law  of  the  place  where 
the  suit  is  being  tried.  Finally,  a  contract  will  be 
interpreted  in  accordance  with  the  law  which  the 
parties  are  presumed  to  have  had  in  mind  at  the  time 
of  the  making  of  the  contract,  presumably  either  the 
*'lex  celebrationis,"  or  the  law  of  the  domicile  of  the 
parties  contracting. 


CHAPTER  ni. 

AGENCY. 

Section  32.    Principal  and  Agent. 

One  of  the  most  important  of  the  special  branches 
of  contracts  is  that  of  Agency.  The  relation  of  prin- 
cipal and  agent  arises  whenever  one  person  employs 
another  to  act  for  him  in  his  place.  The  agent  is 
more  than  the  servant  of  the  principal.  He  is  his 
representative,  and  within  the  scope  of  his  agency 
has  the  power  to  bind  him.  Any  person  may  be  a 
principal  who  is  capable  of  contracting  himself,  and 
with  YeTY  few  exceptions,  as,  for  example,  in  the  case 
of  an  attorney  at  law  or  a  public  official,  anything 
which  a  person  can  do  himself,  he  may  do  through  an 
agent. 

Corporations  may  act  as  agents  if  the  business  to 
be  transacted  is  within  the  scope  of  their  charter, 
and  on  the  other  hand,  practically  all  of  the  business 
of  the  Corporation  must  be  carried  on  through 
agents.  Agency  is  therefore  of  particular  import- 
ance in  the  subject  of  Corporations. 

Any  person  has  legal  capacity  to  act  as  an  agent 
in  any  case  where  as  a  matter  of  fact  it  is  possible 
for  him  to  act.  A  person  may  thus  do  something  as 
agent  for  another  which  he  would  be  incapable  of 
doing  for  himself,  as,  for  instance,  a  minor  may  bind 
his  principal  by  contract. 

49 


50  COMMERCIAL  LAW 

Section  33.    The  Dual  Character  of  Agency. 

Questions  in  agency  may  arise  either  between  the 
principal  and  the  agent,  or  between  the  principal  and 
third  parties.  In  other  words,  the  question  may  be 
either  whether  the  contract  of  agency  was  ever  cre- 
ated, or,  if  it  was  created  whether  the  agent  has  so 
exercised  his  authority  as  to  bind  the  principal.  In 
other  words,  we  have  to  deal  in  this  subject  both  with 
contracts  between  principal  and  agent  and  contracts 
which  the  latter  makes  in  behalf  of  the  former. 

Contracts  of  the  first  class  are  merely  ordinary 
contracts.  The  principles  governing  the  agreement 
of  a  party  to  act  as  agent  for  another  are  the  same 
as  those  governing  his  contract  to  sell  him  certain 
property. 

Section  34.    Classes  of  Agents. 

Agents  are  classified  into  universal  agents,  gen- 
eral agents,  and  special  agents. 

A  universal  agent  has  power  to  represent  and 
bind  the  principal  in  all  cases  whatsoever.  Such 
agents  are  almost  unknown  at  the  present  time. 

A  general  agent  is  one  who  has  general  authority 
to  represent  the  principal  in  transactions  of  a  par- 
ticular kind.  A  traveling  salesman  will  serve  as  an 
illustration  of  a  general  agent. 

A  special  agent  is  one  appointed  to  represent  the 
principal  in  some  special  transaction,  or  to  do  some 
particular  act  for  the  principal. 

The  following  special  classes  of  agents  must 
be  noted:  brokers,  factors,  auctioneers  and  ship 
officers. 


AGENCY  51 

A  broker  is  one  who  buys  and  sells  property  for 
another  when  the  property  is  not  in  his  possession. 

Factors  are  similar  to  brokers,  but  have  the  prop- 
erty in  their  custody. 

An  Auctioneer  is  one  who  sells  property  at  public 
sale  to  the  highest  bidder.  He  is  held  to  be  acting 
for  both  buyer  and  seller,  and  may  sign  a  memoran- 
dum which  will  bind  both  imder  the  provision  of  the 
Statute  of  Frauds. 

Officers  of  ships  have  special  powers  to  dispose  of 
the  ship  or  its  cargo  in  order  to  secure  needed  funds 
when  away  from  the  home  port.  Since  the  intro- 
duction of  the  telegraph,  this  power  has  become  less 
important  and  less  frequently  used. 

An  Attorney  at  Law  is  a  special  kind  of  an  agent, 
especially  licensed  by  law  to  represent  to  other 
parties  before  the  courts  of  justice. 

In  the  case  of  a  partnership,  each  partner  is  an 
agent  of  the  other  partners  and  of  the  firm,  and  has 
power  to  bind  both  the  firm  and  the  other  partners. 

Section  35.    Appointment  of  Agents. 

An  agent  may  be  appointed  expressly,  either 
orally  or  in  writing,  or  by  implication.  Most  ap- 
pointments are  informal.  To  create  the  relationship, 
there  must  be  the  agreement,  either  express  or  im- 
plied, by  both  principal  and  agent.  If  one  party  has 
undertaken  to  act  as  agent  for  the  other  without  his 
authority,  the  principal  may  become  bound  by  rati- 
fying the  acts  of  the  agent. 

The  principal  may  also  become  bound  by  estoppel 
when  he  permits  the  alleged  agent  to  hold  himself 


S2  COMMEECIAL  LAW 

out  as  his  agent  with  his  knowledge  and  without  his 
objection. 

Agency  can  never  be  proved  as  against  the  prin- 
cipal by  the  declaration  of  the  agent ;  the  agent,  how- 
ever, may  testify  in  court  to  the  agency,  the  same  as 
any  other  witness. 

In  suits  between  principal  and  agent,  the  method 
of  proof  of  the  contract  of  agency  does  not  differ 
from  the  method  of  proof  of  any  other  contract. 

Section  36.    Authority  of  the  Agent. 

A  general  agent  has  the  power  to  bind  the  prin- 
cipal in  all  matters  within  the  general  scope  of  his 
agency. 

A  special  agent  has  only  the  power  to  bind  the 
principal  in  special  transactions,  and  in  the  special 
manner  prescribed  by  the  terms  of  his  appointment. 

The  power  to  sell  real  estate  can  only  be  given 
by  a  power  of  attorney  under  seal,  which  must  de- 
scribe the  real  property  to  be  conveyed  sufficiently 
to  identify  it  with  certainty.  The  authority  to  sell 
personal  property  may  be  given  orally;  if  the  power 
to  sell  designates  a  time  or  place  of  sale  the  agent 
is  bound  to  observe  this.  An  agent  who  has  au- 
thority to  sell  has  the  implied  authority  to  give  re- 
ceipts and  to  warrant  goods,  but  has  not  the  au- 
thority to  give  credit  unless  this  was  expressly  given 
to  him.  The  power  to  mortgage  real  property  must 
generally  be  expressly  given;  it  will  not  be  implied 
either  in  a  general  power  to  manage  the  principal's 
business  or  from  a  power  to  sell.  The  authority  to 
purchase  property  does  not  carry  with  it  the  power 
to  buy  on  credit  if  the  agent  is  supplied  with  funds. 


AGENCY  53 

The  authority  to  bind  the  principal  on  commercial 
paper  must  be  especially  given. 

Section  37.    Execution  of  Contract. 

The  general  principle  is  that  the  agent  must  exe- 
cute the  agency  in  accordance  with  the  instructions 
given  him  by  the  principal. 

An  agent  ordinarily  cannot  delegate  his  authority 
to  a  sub-agent.  Exceptions  to  this  rule  are  found  in 
cases  where  the  acts  to  be  done  by  the  sub-agent  are 
mere  ministerial  acts,  or  where  the  agent  himself  is 
unable  to  do  the  act,  as  where  an  agent  engages  an 
attorney  to  defend  a  lawsuit. 

When  several  persons  are  appointed  as  joint 
agents,  they  can  only  act  jointly. 

Section  38.    Relations  Between  Principal  and  Agent. 

The  agent  holds  a  fiduciary  capacity  towards  the 
principal,  and  although  he  is  only  held  liable  for  the 
exercise  of  a  reasonable  degree  of  skill  and  of  care, 
he  is  held  responsible  for  the  highest  possible  degree 
of  good  faith. 

It  is  the  duty  of  the  agent  to  keep  accounts  and 
to  render  an  account  for  all  money  which  he  receives. 
The  agent  is  entitled  to  reimbursement  for  his  ex- 
penses and  reasonable  compensation  for  his  services. 

Section  39.    Relation  of  Principal  and  Third 
Persons. 

Where  a  contract  is  legally  made  by  an  agent  for 
his  principal  with  a  third  person,  the  respective 
rights  and  liabilities  of  the  principal  and  third  per- 


54  COMMERCIAL  LAW 

son  to  each  other  are  the  same  as  if  the  principal  and 
third  person  had  contracted  directly  together. 

The  principal  is  liable  wherever  the  agent  has 
acted  within  the  general  scope  of  his  agency, 
although  the  particular  contract  entered  into  was 
contrary  to  the  instructions  given  to  the  agent,  pro- 
vided the  person  with  whom  the  contract  was  made 
had  no  knowledge  of  such  special  instructions. 

In  the  case  of  the  termination  of  an  agency,  it  is 
necessary  for  the  principal,  in  order  to  protect  him- 
self, to  give  a  general  notice  to  the  public  of  the  ter- 
mination of  the  agency,  and  to  give  special  notice  to 
all  those  persons  with  whom  the  agent  has  been 
accustomed  to  do  business  in  his  behalf. 

Section  40.    Relation  of  Agent  and  Third  Person. 

If  an  agent  contracts  with  a  third  person  in  such 
a  manner  that  he  fails  to  bind  the  principal  he  him- 
self is  liable  to  the  third  party.  In  case  the  agent 
makes  a  contract  in  his  own  name  but  in  reality  for 
his  principal,  the  third  person  on  discovering  the 
undisclosed  principal  may  hold  either  the  principal 
or  agent. 

Section  41.    Termination  of  Agency. 

The  simplest  method  of  terminating  an  agency 
is  by  its  performance  in  accordance  with  the  terms 
of  the  original  contract.  Where  an  agency  was  to 
continue  for  a  certain  definite  time,  it  will  terminate 
at  the  expiration  of  that  time.  If  an  agency  was  for 
some  special  purpose,  it  will  be  terminated  as  soon 
as  its  purpose  is  accomplished,  or  becomes  impos- 
sible.   If  an  agency  is  one  for  an  indefinite  period, 


AGENCY  55 

it  may  be  terminated  at  any  time  by  either  party, 
imless  such  agency  was  coupled  with  an  interest 
upon  the  part  of  the  agent.  In  the  case  of  an  agency 
for  a  definite  period  either  party  has  the  power, 
although  not  the  right,  to  terminate  the  agency  at 
any  time.  In  such  a  case,  the  injured  party  will 
have  a  right  to  an  action  for  damages,  but  not  to  a 
bill  for  specific  performance. 

Either  party  may  terminate  the  agency  on  ac- 
count of  misconduct  or  breach  of  the  contract  of  the 
part  of  the  other.  The  agency  may  also  be  termi- 
nated at  any  time  by  mutual  agreement. 

The  death  or  insanity  of  either  party  will  termi- 
nate the  agency,  except  when  coupled  with  an 
interest. 

The  bankruptcy  of  the  principal  will  terminate 
the  agency,  but  not  necessarily  that  of  the  agent, 
although  the  latter  may  so  impair  the  efficiency  of 
the  agent  as  to  justify  the  principal  in  terminating 
the  agency. 


CHAPTER  IV, 

PARTNERSHIP. 
Section  42.    Definition. 

Partnership  is  a  legal  relation  existing  between 
two  or  more  persons  arising  from  a  contract  either 
express  or  implied.  A  partnership  is  in  fact  a  spe- 
cial form  of  agency.  In  all  general  partnerships,  each 
member  is  the  agent  for  the  firm  and  for  each  mem- 
ber and  has  the  power  to  bind  the  partnership  and 
the  members  thereof. 

A  partnership  may  arise  from  the  defective  or- 
ganization of  a  corporation,  but  unincorporated 
clubs  and  associations  created  for  social,  educational, 
religious,  or  other  similar  purposes  and  not  for  finan- 
cial gain,  are  not  partnerships. 

In  general,  partnerships  can  only  be  created  -^ith 
the  creation  of  mutual  agencies,  and  one  in  whom  this 
relation  of  mutual  agency  does  not  exist  is  not  a 
partner. 

Section  43.    Property  of  Firm. 

The  firm  capital  is  the  amount  which  the  part- 
ners by  mutual  agreement  put  in  as  the  working  capi- 
tal of  the  business  to  be  carried  on  by  the  firm.  It 
is  not  necessary,  however,  that  there  be  any  firm 
capital.  The  business  to  be  carried  on  may  be  one 
where  no  firm  capital  is  absolutely  required,  as  in 

57 


68  COMMERCIAL  LAW 

the  case  of  a  partnership  between  members  of  some 
profession,  as  doctors  or  lawyers,  or  a  firm  may  bor- 
row its  capital,  or  conduct  its  business  entirely  on 
credit. 

A  distinction  must  be  noted  between  firm  capital 
and  firm  property.  Firm  property  is  a  much  broader 
term  and  includes  not  only  the  firm  capital,  but  also 
any  other  property  required  in  any  way  by  the  firm. 
Firm  propertj^  may  vary  in  amount  from  day  to 
day  with  the  gains  and  losses  made  by  the  firm,  while 
the  amount  of  the  capital  remains  stationary  unless 
changed  by  agreement  between  the  parties.  Upon  a 
dissolution  of  a  partnership,  the  partners  will  be  ten- 
ants in  common  in  the  property  left  after  the  part- 
nership debts  have  been  paid.  If  a  partner  fails  to 
contribute  the  full  amount  of  capital  agreed  upon, 
he  is  chargeable  with  interest  for  the  amount  not  con- 
tributed. If  a  partner  contributes  the  us3  of  cer- 
tain property,  and  this  property  is  destroj^ed,  the 
loss  falls  upon  him  since  the  title  is  in  him,  but  the 
loss  of  property  actually  turned  over  to  the  firm  falls 
upon  the  firm. 

Section  44.    Shares  in  Profit  and  Loss. 

In  the  absence  of  any  agreement  to  the  contrary, 
each  partner  will  share  equally  in  the  profits  and 
losses  of  the  business.  This  is  true  even  although 
they  contributed  unequal  portions  of  the  fii'm  capital, 
as  the  services  of  one  partner  may  counterbalance  the 
additional  property  furnished  by  another.  The  part- 
nership agreement  generally  regulates  all  matters 
relative  to  the  amount  of  capital  to  be  furnished  by 
each,  the  services  to  be  rendered  by  each,  the  share  of 


PARTNERSHIP  59 

the  losses  to  be  sustained  by  each,  the  division  of 
profits,  and  the  drawing  account,  if  any,  of  each 
partner. 

The  compensation  of  the  partners  in  every  re- 
spect is  covered  in  the  share  of  the  profits  and  the 
drawing  account,  and  in  the  absence  of  specific  stipu- 
lations to  the  contrary,  the  capital  furnished  by  each 
partner  draws  no  interest,  services  draw  no  salary, 
the  use  of  property  contributed,  in  cases  where  the 
title  to  the  property  itself  is  reserved,  draws  no  rent. 

Section  45. — Nature  of  a  Partner's  Interest  in 
Partnership  Property. 

The  nature  of  a  partner's  interest  in  the  property 
of  a  firm  to  which  he  belongs  is  an  anomalous  one. 
It  is  not  an  interest  in  any  specified  property,  but 
merely  an  interest  in  the  excess  of  the  assets  over 
the  liabilities  of  the  firm.  As  it  cannot  be  determined 
in  what  particular  property  such  surplus  consists, 
the  nature  of  a  partner's  interest  while  the  x^artner- 
ship  is  doing  business  is  an  intangible  one.  Upon  the 
dissolution  of  the  firm,  after  the  payment  of  the 
debts,  each  partner  is  entitled  to  his  proportional 
share  of  the  property  remaining. 

Section  46.    Power  of  Partners. 

As  has  been  said  before,  each  partner  is  the  agent 
of  the  partnership  and  of  the  other  partners.  The 
extent  of  the  authority  of  the  partner  in  different 
transactions  will  depend  partially  upon  the  partner- 
ship agreement,  but  there  are  man}^  powers  which 
are  generally  recognized  as  existing  in  the  ease  of 
all  partnerships. 


60  COMMERCIAL  LAW 

Section  47.    Government  of  Partnership. 

In  general,  a  majority  of  the  partners  have  the 
power  to  bind  the  firm.  In  case  of  an  even  division 
any  proposition  would  fail  of  ratification.  A  person 
dealing  with  a  firm  may  consider  the  consent  of  a 
majority  to  a  contract  as  the  consent  of  the  firm, 
even  although  a  minority  dissent. 

Section  48.    Out-Going  and  In-Coming  Partners. 

No  member  of  a  partnership  has  the  power  to  sell 
his  interests  to  a  third  person,  so  as  to  make  such 
third  pei-son  as  a  new  member  of  the  firm.  The 
reason  for  this  principle  is  on  account  of  the  delectus 
personarum,  or  the  right  of  every  person  to  choose 
those  persons  with  whom  he  will  enter  into  a  partner- 
ship relation. 

With  the  consent  of  the  other  partners,  a  new 
partner  can  be  substituted  for  an  out-going  partner 
and  assume  all  his  rights  and  liabilities. 

If  a  partner  retires  from  a  fii'm  without  a  new 
partner  taking  his  interests,  he  is  entitled  to  his 
share  of  the  property  owned  by  the  firm  at  the  time 
©f  his  retirement,  and  is  liable  for  his  share  of  the 
debts  existing  at  that  time.  He  is  also  liable  to  third 
parties  for  debts  of  the  partnership  contracted  after 
his  withdrawal,  unless  he  gives  proper  notice  of  his 
withdrawal. 

The  in-coming  partner  is  not  liable  for  the  debts 
of  the  partnership  existing  prior  to  his  entrance  into 
the  firm,  unless  he  agreed  to  assume  such  liability 
in  the  contract  by  which  he  became  a  member  of  the 
firm. 


PARTNERSHIP  61 

Section  49.    Limited  Partnerships. 

A  limited  partnership  is  one  containing  one  or 
more  general  partners,  and  one  or  more  special  or 
limited  partners.  A  limited  partner  is  one  who  puts 
in  a  certain  prescribed  amount  in  the  capital  of  the 
firm  and  is  not  personally  liable  beyond  this  amount. 
Limited  partnerships  are  regulated  by  statute  and 
all  the  provisions  of  the  statutes  must  be  carefully 
complied  with,  or  all  the  partners  will  be  liable  as 
general  partners. 

Section  50.    Termination  of  a  Partnership. 

A  partnership  is  terminated  by  the  termination 
of  the  time  for  which  it  was  created;  by  the  agree- 
ment of  all  the  partners;  or  by  the  death,  insanity, 
or  bankruptcy  of  one  or  more  of  the  partners. 

In  case  of  misconduct  of  one  of  the  partners,  a 
court  of  equity  has  the  right  to  dissolve  the  partner- 
ship, and  wind  up  its  affairs,  upon  the  petition  of 
one  or  more  of  the  other  partners. 

A  partnership  may  also  be  dissolved  by  one  party 
assigning  his  interest  to  another  without  the  consent 
of  the  other  partners.  In  case  of  the  death,  retire- 
ment, or  bankruptcy  of  one  of  the  partners,  the  re- 
maining partners,  known  as  the  surviving  partners, 
have  the  authority  to  close  up  the  business  of  the 
partnership. 


CHAPTER  V. 

SALES. 
Section  51.    Definition. 

A.  sale  is  the  complete  transfer  of  the  full  prop- 
erty rights,  that  is,  the  title,  in  the  personal  property- 
sold  by  the  seller,  and  made  in  consideration  of  the 
price  in  money  paid  by  the  buyer.  A  sale  must  be 
carefully  distinguished  from  a  bailment,^  a  mort- 
gage, and  a  consignment. 

In  none  of  these  three  transactions  does  the  title 
pass.  A  sale  must  also  be  distinguished  from  a  gift, 
where  the  property  is  transferred  without  considera- 
tion, and  a  barter  where  personal  property  is  ex- 
changed directly  for  other  personal  property,  with- 
out the  use  of  money  in  the  transaction.^ 

Section  52.    The  Contract  of  Sale. 

The  executed  contract  of  sale,  divides  with  cer- 
tain forms  of  bailments,  the  honor  of  being  the 
oldest  form  of  contract  recognized  by  the  Common 
law.  The  main  principles  of  the  law  of  sales  are  of 
Common  law  origin,  many  of  them  being  very  old, 
and  have  been  little  changed  by  modern  legislation. 

The  requisites  for  a  valid  contract  of  sale  are  the 
same  as  in  other  forms  of  contracts.  The  same  rules 
also  apply  as  to  the  capacity  of  parties.    Tliere  is  the 

'  See  Chapter  VI. 

'See  Volume  on  "Currency,  Banking  and  Exchange,"  Sec.  7. 

63 


G4  COMMERCIAL  LAW 

same  necessity  for  a  consideration,  but  in  contracts 
of  sales  the  consideration  must  be  money.  The  ques- 
tion of  the  legality  of  the  contract  of  sale,  and  of  the 
formal  requisites  have  both  been  treated  as  fully  as 
is  necessary  under  the  general  heading  of  contracts. 

Section  53.    Subjects  of  Sale. 

Any  species  of  personal  property,  either  corporeal 
or  incorporeal,  may  be  the  subject  of  a  sale.  The  ob- 
jects of  sales  thus  include  corporeal  movable  prop- 
erty of  every  description,  intangible  property,  such 
as  the  good  will  of  a  partnership,  or  a  promissory 
note,  and  growing  crops  (fructus  industriales) . 
Fructus  naturales,  however,  until  severed  from  the 
soil  are  considered  real  property  instead  of  personal.^ 

If  an  article  which  is  the  subject  of  a  contract  is 
not  in  existence,  there  can  be  no  sale.  If,  however, 
the  property  has  potential  existence,  as  in  the  case 
of  a  year's  produce  from  certain  fields,  there  may  be 
a  sale. 

Section  54.    Passing  the  Title. 

The  question  as  to  when  the  title  passes  in  the 
case  of  a  sale,  depends  primarily  upon  the  intention 
of  the  parties.  Where  there  is  an  executed  sale,  with 
no  remaining  debt  due  on  either  side,  the  title  passes 
at  once.  If  it  is  provided  that  the  vendor  shall  make 
the  delivery,  the  title  passes  upon  such  delivery. 
Where  the  sale  is  of  a  certain  quantity  or  number  of 
goods  of  a  uniform  standard,  ordered  by  sample,  the 

'  Fructus  industriales  are  such  produce  of  the  soil  as  are  the  result  of 
annual  plantings,  while  fructus  naturales  are  the  produce  of  trees  or 
plants  which  live  from  year  to  year  but  produce  annually. 


SALES  65 

title  passes  when  the  particular  goods  to  be  trans- 
ferred to  the  vendee  have  been  set  apart. 

If  there  is  a  sale  of  specific  goods,  but  the  vendor 
has  something  to  do  to  put  them  in  condition,  title 
will  not  pass  until  such  work  has  been  performed. 

Where  goods  are  delivered  to  the  buyer  on  ap- 
proval, the  title  remains  in  the  vendor  until  the  buyer 
has  signified  his  approval,  but  if  the  goods  are  sold 
and  delivered  to  the  vendee  with  an  option  to 
return  them  if  it  is  not  satisfactory,  the  title  passes 
to  the  vendee.  In  this  latter  case  there  is  a  sale  upon 
condition  subsequent.  The  risk  as  to  the  property, 
which  is  the  object  of  the  sale,  follows  the  title. 

Section  55.    Conditions,   Warranties  and 
Representations. 

A  conditional  contract  of  sale  is  one  which  will 
become  effective  or  will  be  defeated  by  the  happen- 
ing or  not  happening  of  a  certain  event.  A  condition 
is  a  part  of  the  contract  of  sale.  A  condition  prece- 
dent is  one  which  must  be  fulfilled  before  the  con- 
tract becomes  binding.  A  condition  subsequent  is 
one  the  breach  of  which  terminates  the  contract. 
In  the  case  of  the  breach  of  a  condition  the  remedv 
is  an  action  for  breach  of  the  contract. 

A  representation  is  a  statement  made  prior  to  the 
making  of  a  contract  as  an  inducement  to  the  other 
party  to  enter  into  the  said  contract.  A  representa- 
tion is  not  part  of  a  contract.  If  the  representation 
is  false  the  remedy,  if  any,  is  an  action  in  tort  for 
deceit. 

A  warranty  is  a  collateral  agreement  guarantee- 
ing certain  things  to  be  so.    If  the  warranty  is  false 


66  COMMERCIAL  LAW 

the  remedy  is  an  action  on  the  collateral  contract  of 
warranty  instead  of  on  the  main  contract  itself. 

Warranties  may  be  either  express  or  implied. 
The  following  are  the  principal  implied  warranties 
in  the  case  of  a  contract  of  sale ; 

(a)  That  the  vendor  has  a  good  title, 

(b)  That  the  goods  are  suitable  for  the  purpose 
for  which  they  are  sold, 

(c)  That  in  the  case  of  the  sale  of  provisions, 
the  provisions  are  fit  for  use  as  food, 

(d)  In  cases  where  goods  are  sold  by  sample  or 
description,  that  the  goods  correspond  to  such  sample 
or  description. 

Section  56.    The  Doctrine  of  Caveat  Emptor. 

The  doctrine  of  ** caveat  emptor"  translated 
means,  *'Let  the  buyer  beware;"  in  other  words,  the 
vendee  is  held  responsible  for  knowledge  of  those 
facts  which  he  should  have  been  able  to  ascertain. 
The  principal  exceptions  to  this  rule  are  in  the  cases 
covered  by  the  implied  warranties. 

Section  57.    Delivery  and  Acceptance. 

There  having  been  a  sale,  there  must  be  a  deliv- 
ery of  the  goods  sold.  Delivery  may  be  either  actual 
or  constructive.  Constructive  delivery  takes  place 
where  the  title  is  transferred  without  any  change  of 
location  of  the  goods  and  the  vendee  is  to  take  them 
away.  Actual  delivery  is  where  the  goods  are  act- 
ually delivered  to  the  vendee  or  his  agent.  If  the 
delivery  is  effected  through  a  caiTier,  the  delivery 
takes  place  upon  delivery  to  the  carrier  if  the  carrier 
is  the  agent  of  the  vendee,  and  upon  delivery  to  the 
vendee,  if  the  carrier  is  the  agent  of  the  vendor. 


SALES  67 

In  case  the  goods  are  not  personally  selected  by 
the  vendee  he  has  the  right  to  examine  them  before 
acceptance.  Acceptance  of  goods  may  be  either  ex- 
press or  implied.  Implied  acceptance  is  effected  by 
the  vendee  exercising  any  act  of  ownership  over  the 
goods. 

Where  acceptance  is  made  either  through  fraud, 
or  mistake  of  fact,  the  vendee  will  generally  be  able 
to  obtain  relief. 

Section  58.    Rights  of  Vendor. 

In  the  case  of  an  executed  contract  of  sale,  the 
vendor  can  always  sue  for  the  contract  price.  If  the 
vendee  after  the  making  of  the  contract  refuses  to 
accept  the  goods,  the  vendor  can  sue  him  for  breach 
of  contract.  If  the  vendor  is  still  in  possession  of 
the  goods,  he  has  a  lien  on  the  goods  for  the  piuxhase 
price,  and  can  sell  the  goods  and  sue  the  vendee  for 
the  difference  between  the  contract  price  and  the 
price  for  which  the  goods  were  sold  to  a  thii'd  person. 
If  the  vendor  after  having  shipped  the  goods  learns 
of  the  insolvency  of  the  vendee,  he  may  exercise  what 
is  known  as  the  right  of  "stoppage  in  transitu"  and 
have  the  goods  sent  back  to  him. 

Section  59.    Remedies  of  Vendee. 

After  the  title  has  passed,  the  vendee  may  bring 
an  action  in  replevin  to  recover  the  goods  if  the 
vendor  refuses  to  deliver  them.  If  the  vendor  re- 
fuses to  deliver  the  goods,  the  vendee  may  sue  him 
for  damages  for  breach  of  the  contract.  The  meas- 
ure of  the  damages  will  be  the  difference  between 
the  contract  price  and  the  price  which  the  vendee  is 
obliged  to  pay  for  similar  goods  from  a  third  painty. 


68  COMMERCIAL  LAW 

If  the  goods  are  not  such  as  can  be  purchased 
elsewhere  conveniently  the  vendee  may  have  a  bill  in 
equity  for  specific  performance  of  the  contract. 

In  case  of  false  representation,  the  vendee  has  a 
right  of  action  in  tort  for  deceit. 

In  case  of  a  breach  of  warranty,  the  vendee 
may  bring  an  action  ''ex  contractu'*  for  breach  of 
warranty. 


CHAPTER  VI. 
BAILMENTS. 

Section  60.    Definition. 

A  Bailment  is  the  delivery  of  goods  for  some  pur- 
pose, upon  a  contract,  express  or  implied,  that  after 
the  purpose  has  been  fulfilled  they  shall  be  redeliv- 
ered to  the  bailor,  or  otherwise  dealt  with  according 
to  his  directions,  or  kept  till  he  reclaim  them.  A 
bailment  differs  from  a  sale  as  follows:  In  a  sale 
there  is  a  transfer  of  the  title,  with  or  without  a 
transfer  of  possession,  while  in  a  bailment  there  is  a 
transfer  of  possession  without  a  change  of  title. 
A  bailment  necessarily  involves  the  separation  of  the 
title  and  the  right  of  possession,  the  bailor  having  the 
former,  and  the  bailee  the  latter.  As  otherwise  ex- 
pressed, the  bailor  has  the  general  property,  in  the 
thing  bailed,  and  the  bailee,  the  special  property. 

Section  61.    Creation  and  Incidents  of  Bailment 

Relation. 

A  delivery,  either  actual  or  constructive,  is  nec- 
essary to  create  a  bailment.  A  bailment  without  de- 
hvery  is  void  as  against  subsequent  bona  fide  pur- 
chasers, and  generally  as  against  creditors.  In  addi- 
tion to  the  delivery  there  must  be  an  acceptance  by 
the  bailee. 

In  the  absence  of  statutory  provisions  to  the  con- 

flO 


70  COMMERCIAL  LAW 

trary,  any  kind  of  personal  xDroi^erty  may  be  the  sub- 
ject matter  of  a  bailment.  Even  incorporeal  per- 
sonal property  may  be  the  subject  of  a  bailment,  but 
not  property  not  yet  in  existence. 

Any  person  who  has  the  power  to  contract,  has 
the  power  to  make  a  contract  of  bailment,  and  to  be- 
come either  a  bailor  (provided,  of  course,  he  has  any 
property  to  serve  as  the  subject  matter  of  a  bail- 
ment) or  a  bailee.  The  contract  of  bailment  need 
not  be  an  express  one,  the  relation  may  be  created  by 
an  implied  contract. 

If  the  subject  of  the  bailment  is  injured  or  de- 
stroyed by  a  third  person,  either  the  bailor  or  the 
bailee  has  a  right  of  action  against  such  party. 

Section  62.    Classification  of  Bailments. 

The  modem  common  law  classification  of  bail- 
ments is  the  three-fold  classification  set  forth, in 
Coggs  vs.  Bernard,  as  follows :  I 

(1)  Bailments  for  the  sole  benefit  of  the  bailor. 

(2)  Bailments  for  the  sole  benefit  of  the  bailee. 

(3)  Bailments  for  mutual  benefit. 

In  bailments  of  the  first  class  the  bailee  is  only 
required  to  use  a  slight  degree  of  care,  and  is  only 
liable  for  gross  negligence. 

In  bailments  of  the  second  class  the  bailee  is  re- 
quu'ed  to  use  the  highest  degree  of  care,  and  is  liable 
for  slight  negligence. 

In  bailments  of  the  third  class  the  baUee  is  re- 
quired to  use  ordinary  care,  and  is  liable  for  or- 
dinary negligence. 

An  example  of  a  bailment  of  the  first  class  is 
found  in  the  case  where  one  party  agrees  to  kee]3 


BAILMENTS  71 

some  article  for  another,  or  to  do  some  work  thereon, 
without  compensation. 

Bailments  for  mutual  benefit  aiise  where  an  ar- 
ticle is  hired  for  use,  or  labor  is  hii'ed  to  be  used  on 
an  article. 

Bailments  for  the  sole  benefit  of  the  bailee  are 
those  where  an  article  is  loaned  to  be  used  by  the 
bailee  without  compensation. 

Section  63.    Bailments  Involving  Special  Liability. 

Two  species  of  bailments  involve  a  special  degree 
of  liability;  these  are  bailments  to  Common  Carriers 
and  to  Inn  Keepers,  which  will  be  treated  in  the  two 
following  sections. 

Section  64.    Inn-Keepers. 

An  inn-keeper  is  one  who  holds  out  that  he  will 
receive  all  travelers  and  sojourners  who  are  willing 
to  pay  a  price  adequate  to  the  sort  of  accommodation 
provided,  and  who  come  in  a  situation  in  which  they 
are  fit  to  be  received. 

The  business  of  an  inn-keeper  is  considered  as  of 
a  public  character  and  is  therefore  subjected  to 
special  regulations. 

There  has  been  some  dispute  as  to  the  correct 
statement  of  the  common  law  rule  as  to  the  bailment 
liability  of  inn-keepers,  but  the  correct  statement 
probably  is  that,  under  the  common  law  the  inn- 
keeper is  an  insurer  of  the  goods  of  his  guest  against 
all  losses  not  due  to  the  act  of  God,  the  public  enemy, 
or  the  negligence  of  the  guest  himself  or  his  servants. 

The  harshness  of  this  rule  has  been  somewhat 
abridged  in  modern  times,  and  the  inn-keeper  is  per- 


T2  COMMERCIAL  LAW 

mitted  to  protect  himself  against  loss  in  various 
ways.  In  particular  it  is  permissible  for  the  inn- 
keeper to  provide  a  safe  place  for  the  keeping  of  val- 
uables and  to  refuse  to  be  responsible  for  the  loss  of 
goods  (except  those  which  the  guest  needs  to  keep 
about  his  person  for  immediate  use)  which  are  not 
delivered  to  him  for  safe-keeping. 

This  special  bailment  liability  only  attaches  to 
the  property  of  guests. 

A  guest  is  a  transient  person  who  resorts  to,  and 
is  received  at  an  inn  for  the  purpose  of  obtaining  the 
accommodations  which  it  purports  to  afford.  Per- 
sons not  travelers  may  be  guests  at  an  inn  or  hotel. 
The  essential  point  as  to  a  guest  is  that  he  is  a  tran- 
sient whose  stay  is  more  or  less  temporary  and 
uncertain. 

A  person  may  become  a  guest  at  an  inn  before 
he  has  actually  arrived  there,  provided  his  baggage 
has  been  taken  to  the  inn  and  put  under  the  control 
of  its  proprietor.  A  guest  generally  comes  without 
any  bargain,  remains  without  one,  and  may  go  when 
he  pleases,  paying  only  for  the  actual  entertainment 
received.  Accordingly  he  ceases  to  be  a  guest  when 
he  pays  his  bill  and  departs,  in  the  absence  of  any 
agreement  to  the  contrary. 

Section  65.    Common  Carriers. 

A  common  carrier  is  one  who  engages  regularly 
in  the  business  of  transporting  for  hire.  The  busi- 
ness of  a  common  carrier  is  considered  to  be  of  a 
quasi  public  character,  and  is  subject  to  special  pub- 
lic regulations.    Common  carriers  under  the  Com- 


BAILMENTS  73 

mon  law  are  subjected  to  an  especially  high  degree 
of  bailment  liability. 

On  account  of  the  public  nature  of  the  business  of 
common  carriers  they  are  obliged  to  receive  all  goods 
delivered  to  them  for  transportation  destined  for  any 
place  which  the  common  carrier  habitually  makes 
delivery.  Common  carriers,  however,  cannot  be 
obliged  to  receive  goods  beyond  their  facilities  for 
transportation,  nor  can  they  be  obliged  to  receive 
dangerous  goods  or  goods  improperly  packed.  It  is 
the  duty  of  a  common  carrier  not  to  discriminate  be- 
tween their  customers  but  to  transport  his  goods  in 
the  order  in  which  they  are  received.  A  common  car- 
rier, however,  may  give  preference  to  perishable 
goods. 

A  common  carrier  is  liable  as  an  insiu-er  for  the 
safety  of  all  goods  entrusted  to  his  care.  The  losses 
which  a  common  carrier  of  goods  is  exempted  from 
liability  for  are  those  occasioned  by  act  of  God,  by 
public  enemies,  by  the  act  of  the  shipper,  or  by  the 
inherent  nature  of  the  goods  themselves. 

It  is  possible  for  common  carriers  to  limit  their 
bailment  liability  to  a  certain  extent,  either  by  gen- 
eral notice,  or  by  special  contract. 

The  extent  to  which  liability  may  be  limited  by 
the  first  method  is  very  slight.  Although  isolated 
cases  may  be  found  to  the  contrary,  the  better  view 
unquestionably  is  that  there  is  only  one  class  of 
cases  in  which  a  carrier  may  limit  its  liability  by  a 
notice  publicly  posted  but  not  shown  to  have  been 
called  to  the  attention  of  the  particular  shipper 
whom  it  is  sought  to  affect,  namely,  where  the  car- 
rier has  posted  a  notice  to  the  effect  that  the  true 


74  COMMEECIAL  LAW 

value  of  all  articles  shipped  must  be  declared  at  the 
time  the  shipment  is  made,  or  else  the  carrier  will  be 
liable  only  for  the  apparent  value  of  such  articles. 

The  right  of  a  common  carrier  to  limit  his  lia- 
bility by  special  contract  is  much  broader.  The  only 
limitation  upon  such  right  is  that  the  limitation  shall 
not  be  illegal  or  unreasonable  and  that  no  unfair  ad- 
vantage be  taken  of  the  shipper.  In  the  United 
States  the  courts  have  held,  in  the  great  majority  of 
cases,  that  when  a  shipper  accepts  a  bill  of  lading 
containing  provisions  for  a  limitation  of  the  common 
law  liability  of  the  carrier,  such  provision  is  binding 
upon  him  as  a  part  of  his  contract. 

The  special  bailment  liability  of  connnon  car- 
riers terminates  as  soon  as  the  goods  have  reached 
their  destination,  and  the  consignee  has  been  given 
sufficient  opportunity  to  remove  them.  Thereafter 
the  position  of  the  common  carrier  is  merely  that  of  a 
warehouseman. 

Common  carriers  have  a  lien  on  all  goods  trans- 
ported by  them  and  still  in  theii*  possession  for  all 
charges  due  for  transportation  or  storage.  This  right 
to  a  lien  covers  all  charges  for  money  advanced  for 
the  payment  of  custom  duties,  but  does  not  cover 
demurrage  charges. 

Section  66.    Carriers  of  Passengers. 

Carriers  of  passengers  are  not  strictly  bailees,  as 
there  can  be  no  bailment  of  a  person.  They  are,  how- 
ever, bailees  of  the  baggage  of  the  passenger. 

The  degree  of  liability  of  carriers  of  passengers 
is  far  less  than  that  of  common  carriers  of  goods.  A 
carrier  of  passengers  is  only  liable  for  injuries  re- 


BAILMENTS  75 

ceived  by  the  passenger  when  such  injuries  are  occa- 
sioned by  the  negligence  of  the  carrier.  The  liability 
of  carriers  of  passengers  for  the  baggage  of  passen- 
gers, however,  is  the  same  as  that  of  common  carriers. 
Carriers  of  passengei^  may  by  notice  limit  their 
liability  to  goods  actually  required  by  passengers  on 
their  journey  and  tQ  a  certain  sjoecified  value. 


CHAPTER   Vn. 

BILLS  AND  NOTES. 

Section  67.    Historical  Development. 

The  law  of  Bills  and  Notes  presents  many  striking 
contrasts  to  the  law  governing  other  species  of  con- 
tracts. The  reason  for  this  is  to  be  found  in  the  his- 
tory of  the  development  of  this  branch  of  the  law. 
The  general  law  of  contracts  in  the  Common  law  sys- 
tem was  extremely  indigenous  to  England.  There  is 
no  part  of  the  law  which  has  been  so  little  affected  by 
foreign  influences,  there  is  no  other  branch  of  the  law 
in  which  a  more  striking  difference  is  to  be  observed 
between  the  two  great  systems  of  jurisprudence,  the 
Common  law  and  the  Civil  law.  The  law  of  Bills 
and  Notes,  on  the  other  hand,  is  a  foreign  importa- 
tion; it  is  a  branch,  and  the  most  important  branch, 
of  the  great  *'Lex  Mercatoria"  or  Law  Merchant, 
which  was  created  by  the  joint  effort  of  the  mer- 
chants of  the  various  European  countries  during  the 
latter  part  of  the  Middle  Ages,  and  which  first 
reached  a  high  degree  of  development  in  the  Com- 
mercial cities  of  northern  Italy.^  When  introduced 
into  England,  the  principles  of  the  Law  Merchant 
were  first  enforced  in  the  special  Courts  of  the  Mer- 
chants, and  later  in  the  Admiralty  Courts,  while  the 

'For  an  account  of  the  History  of  the  Law  Merchant  see  Street's 
Foundation  of  Legal  Liability,  Vol.  II,  p.  328  et  seq.,  or  Appendix  to  the 
first  volume  of  Cranch  's  Reports  o  f  the  Supreme  Court  of  the  United 
Btatea. 

77 


78  COMMERCIAL  LAW 

regular  Common  Law  Courts  did  not  begin  to  take 
jurisdiction  of  such  actions  imtil  the  seventeenth 
centur3\ 

Bills  and  Notes  are  treated  together  on  account 
of  the  general  similarity  of  the  law  governing  both 
classes  of  instruments.  They  are,  however,  distinct 
species  of  commercial  paper,  presenting  many 
differences. 

Section  68.    Bills  of  Exchange. 

A  bill  of  exchange  is  an  unconditional  order  in 
writing  for  the  pa\Tnent  of  a  certain  sum  of  money 
absolutely  and  at  all  events.  Bills  of  exchange  are 
of  Italian  origin  and  were  introduced  into  England 
about  the  beginning  of  the  thirteenth  century.  Bills 
of  exchange  are  either  inland  or  foreign.  An  inland 
bill  of  exchange  is  payable  in  the  same  state  or  coun- 
try in  which  it  is  drawn.  A  foreign  bill  of  exchange 
is  one  payable  in  some  state  or  country  other  than 
that  in  which  it  is  drawn. 

There  are  three  original  parties  to  a  bill  of  ex- 
change: the  drawer  (who  draws  the  order,  or  in  other 
words,  orders  the  pajonent  of  the  money),  the  payee 
(in  whose  favor  the  order  is  drawn),  and  the  drawee 
(on  w^hom  the  order  is  drawn). 

A  bill  of  exchange  must  contain  an  absolute  order 
to  pay  a  definite  sum  of  money.  Although  no  par- 
ticular words  are  required,  there  must  be  more  than 
the  conferring  of  authority  to  pay,  or  the  asking  of 
a  favor. 

Section  69.    Promissory  Notes. 
A  promissory  note  may  be  defined  as  follows : 


BILLS  AND  NOTES  79 

*'An  open  promise  in  writing  by  one  person  to 
pay  another  person  therein  named,  or  to  his  order 
or  to  bearer,  a  specified  sum  of  money  absolutely  and 
at  all  events."^ 

There  are  only  two  original  parties  to  a  promis- 
sory note,  the  maker  (who  makes  the  note  and  prom- 
ises to  pay  the  money)  and  the  payee  (in  whose  favor 
the  note  is  made) . 

Section  70.    Common  Characteristics  of  Bills  and 

Notes. 

The  most  important  common  characteristics  of 
both  classes  of  negotiable  instruments,  already  re- 
ferred to,  are  the  following: 

(1)  Certainty  of  terms, 

(2)  Necessity  for  payment  in  money, 

(3)  Negotiability, 

(4)  Presumption  of  Consideration, 

(5)  Necessity  for  delivery, 

(6)  Days  of  Grace. 

These  will  be  considered  in  tima  in  the  six  fol- 
lowing sections. 

Section  71.    Certainty  of  Terms. 

First  of  all  there  must  be  absolute  certainty  in  all 
the  temis  of  a  bill  or  note.  Any  uncertainty  will 
take  away  from  the  instrument  those  peculiar  char- 
acteristics which  attach  to  it  as  a  bill  or  note.  There 
must  be  certeinty  of  amoimt,  but  the  rule  that  "that 
is  certain  which  is  capable  of  being  rendered  cer- 
tain," applies  here  if  the  amount  to  be  paid  can  be 
ascertained  at  the  time  the  paper  is  delivered,  fi'om 

*  Danielson  Negotiable  Instruments,  Sec.  28. 


80  COMMERCIAL  LAW 

the  face  of  the  instrument  itself  without  the  assist- 
ance of  any  extrinsic  aid.  It  is  not  sufficient  if  the 
amount  to  be  paid  can  be  ascertained  by  the  time  the 
payment  becomes  due. 

Certainty  as  to  time  of  payment  is  essential  to  a 
bill  or  note,  and  any  contingency  in  this  respect  will 
render  the  instrument  containing  it  non-negotiable. 
Exceptions  to  this  last  rule  exist  in  conditions  sanc- 
tioned by  commercial  usage  as  to  demand,  present- 
ment, or  sight,  and  contingencies  when  the  payment 
depends  on  an  event  which  is  bound  to  ultimately 
happen. 

Finally,  and  most  important  of  all,  there  must  be 
absolute  certainty  of  the  payment  itself,  or  rather, 
absolute  certainty  that  the  payment  will  be  due.  A 
conditional  order  or  promise  to  pay  is  not  a  bill  or 
note. 

Section  72.    Payment  in  Money. 

The  special  rules  governing  bills  and  notes  are 
limited  in  their  application  to  orders  or  promises  to 
pay  in  money,  and  do  not  include  orders  or  promises 
to  deliver  any  other  species  of  personal  property. 
This  rule  has  been  changed  by  statutes  in  some  states, 
but  is  reaffirmed  in  the  Uniform  Negotiable  Instru- 
ment Act. 

Section  73.    Negotiability. 

The  most  striking  characteristic  of  both  bills  and 
notes  at  the  present  day  is  their  negotiability.  This 
quality,  however,  did  not  exist  at  first. 

By  negotiability  is  meant  the  ability  of  the  owner 


BILLS  AND  NOTES  81 

to  assign  his  rights  to  another  so  that  this  second 
party  becomes  the  owner  of  the  chose  in  action  and 
may  bring  suit  thereon.  Such  a  transaction  is  very 
contrary  to  the  principles  of  the  common  law,  which 
prohibited  all  assignments  or  transfers  of  choses  in 
action  on  the  ground  that  such  assignments  tended  to 
encourage  litigation,  although  the  common  law,  on 
this  subject,  has  been  somewhat  modified  in  recent 
years. 

Even  today,  ''while  negotiability  is  the  character- 
istic equity  of  bills  and  notes,  it  is  not  essential  to 
their  validity.  Non-negotiable  instruments  may  be 
declared  upon  as  bills  and  notes,  have  been  held  to 
impoii;  a  consideration,  and  are  entitled  to  days  of 
grace.  By  indorsing  such  an  instrument  the  payee 
becomes  liable  to  the  indorsee,  but  the  latter  cannot 
independently  of  statute  sue  the  maker  or  drawer.'' ' 

Section  74.    Presumption  of  Consideration. 

Closely  connected  with  the  subject  of  the  nego- 
tiability of  bills  and  notes,  is  that  of  the  presumption 
of  consideration  for  such  instruments.  Every  bill 
or  note  is  presiuned  to  be  given  for  a  valuable  con- 
sideration. Between  the  immediate  parties  the  true 
state  of  facts  may  be  shown,  though  even  here  the 
burden  of  proof  is  upon  the  party  who  denies  that 
there  was  a  consideration.  The  want  of  considera- 
tion can  never  be  set  up  against  a  third  person  who 
has  given  a  valuable  consideration  for  a  bill  or  note, 
and  has  taken  such  bill  or  note  before  maturity,  and 
without  knowledge,  either  actual  or  constructive,  of 
the  lack  of  consideration. 

•Ameriean  and  English  Encyclopedia  of  Law,  Vol.  IV,  p.  80. 


83  COMMEECIAL  LAW 

Section  75.    Necessity  for  Delivery. 

The  delivery  of  a  bill  or  note  is  essential  to  its 
validity.  No  contract  is  made  and  no  rights  are 
created  until  delivery  takes  place. 

Section  76.    Days  of  Grace. 

Days  of  grace  are  three  additional  days  given  to 
the  party,  primarily  liable  on  a  bill  or  note,  in  which 
to  make  payment.  Originally,  days  of  grace  were 
only  allowed  to  the  drawee  of  a  foreign  bill.  Later 
they  were  extended  to  practically  all  negotiable 
paper.  Next  a  movement  in  the  other  direction  be- 
gan and  days  of  gi'ace  have  now  been  generally  abol- 
ished. This  matter  is  entirely  regulated  by  statute. 
Days  of  grace  are  not  allowed  under  the  Uniform 
Negotiable  Instrument  Act.* 

Section  77.    Acceptance  of  Bills  of  Exchange. 

The  acceptance  of  a  bill  of  exchange  is  an  agree- 
ment, generally  on  the  part  of  the  drawee,  but  some- 
times on  the  part  of  some  other  party,  to  pay  the  bill 
absolutely  according  to  its  tenor,  or  according  to 
special  terms  contained  in  the  contract  of  acceptance. 

The  holder  of  a  dill  of  exchange  (or  draft, 
as  it  is  often  called)  may  refuse  to  accept  a  qualified 
acceptance. 

The  drawee  of  a  bill  of  exchange  may  refuse  to 
accept  a  bill,  although  he  is  indebted  to  the  drawer, 
or  has  funds  of  the  drawer's  in  his  possession,  or  has 
promised  to  accept  the  bill.  Even  if  he  has  received 
a  valuable  consideration  for  agreeing  to  accept  the 
bill,  he  may  refuse  to  do  so,  and  the  payee  of  the  bill 

*See  Section  87. 


BILLS  AND  NOTES  83 

will  have  no  right  of  action  against  him.  In  such  a 
case,  however,  the  drawer  has  a  right  of  action 
against  the  di^awee, — not  on  the  bill,  but  for  breach 
of  the  contract  to  accept. 

Upon  the  acceptance  of  a  bill  of  exchange  the  ac- 
ceptor (i.  e.,  the  drawee)  becomes  primarily  liable 
thereon,  and  the  drawer  thereafter  is  only  second- 
arily liable,  being  in  a  similar  position  to  that  of  an 
indorser.  The  acceptance  of  a  bill  admits  every- 
thing essential  to  its  validity. 

An  acceptance  may  be  made  either  in  writing  or 
orally.  If  in  writing,  it  is  held  that  any  form  of 
words  which  do  not  in  themselves  negative  the  re- 
quest of  the  bill  should  be  treated  as  a  valid  accept- 
ance. The  following  have  been  held  to  constitute  a 
valid  acceptance  when  written  on  the  bill:  *'Seen;" 
"Presented;"  **I  will  pay  this  bill;"  or  simply  the 
name  of  the  drawee.  An  acceptance  may  be  made  on 
a  separate  paper;  but  in  such  cases  the  acceptance 
must  be  clear  and  unequivocal. 

An  acceptance  of  a  bill  may  be  made  before  the 
instrument  has  been  completed  as  a  bill  of  exchange, 
or  after  the  maturity  of  the  bill,  in  which  latter  case 
it  is  construed  as  a  promise  to  pay  on  demand.  A  bill 
may  be  accepted  after  the  death  of  the  drawer. 

There  may  be  an  implied  acceptance. 

Ordinarily  an  acceptance  can  only  be  made  by 
the  drawee  of  a  bill  and  the  acceptance  of  the  bill  by 
another  person  is  not  permitted.  An  acceptance  may 
be  made  by  a  duly  authorized  agent,  for  his  principal. 
Wlien  several  persons  are  named  in  the  l)ill  as 
drawees,  either  jointly  or  in  the  alternative,  either 
may  accept. 


84  COMMERCIAL  LAW 

Where  the  drawee  of  a  bill  has  refused  or  failed, 
for  any  reason,  to  accept  a  bill,  any  person  who  so 
desires  may  accept  it  "supra  protest,'*  or  for  honor. 
Such  an  acceptance  is  for  the  purpose  of  protecting 
the  credit  of  some  party  to  the  bill.  An  acceptor 
supra  protest  upon  paying  the  bill  becomes  entitled 
to  recover  the  amount  thereof  from  any  party  to  the 
bill  who  would  have  been  liable  to  the  holder.  This 
transaction  furnishes  an  exception  to  the  general 
rule  that  no  person,  by  his  own  sole  actions,  can  make 
himself  the  creditor  of  another  party. 

Section  78.    Transfer  of  Negotiable  Instruments. 

A  negotiable  instrument  may  be  transferred  by 
any  one  of  four  general  ways : 

(1)  Assignment. 

(2)  Operation  of  law. 

(3)  Delivery. 

(4)  Indorsement. 

When  a  negotiable  instrument  is  transferred  by 
a  separate  writing,  the  transfer  is  by  assignment, 
and  the  assignee  can  never  take  a  better  title  than 
the  assignor. 

Title  passes  by  operation  of  law  from  (a)  a  bank- 
rupt holder  to  his  assignee  in  bankruptcy;  (b)  from 
a  deceased  holder  to  his  personal  representatives; 
and  (c)  in  some  jurisdictions,  from  a  married  woman 
to  her  husband.  Upon  the  death  of  a  joint  holder 
the  title  vests  in  the  surviving  holder  or  holders. 

Title  may  be  transferred  simply  by  delivery,  in 
the  case  of  a  bill  or  note  payable  to  bearer. 


BILLS  AND  NOTES  85 

Section  79.    Indorsements. 

An  indorsement  is  simply  the  signature  of  any 
person  (with  or  without  additional  words)  written 
upon  the  back  of  a  bill  or  note.  An  indorsement  may 
be  on  the  face  of  the  paper,  but  such  an  indorsement 
is  both  rare  and  improper. 

If  the  indorser  has  no  interest  in  the  bill  or  note, 
he  becomes  practicaly  a  guarantor,  and  is  called  an 
anomalous  indorser.  If  the  indorser  is  the  holder  of 
the  paper,  the  effect  of  indorsement  (followed  by  de- 
livery) is  to  transfer  the  title,  and  (except  in  the  case 
of  an  indorser  without  recourse)  to  guarantee  the 
payment  of  the  paper. 

"The  contract  of  indorsement  is  not  an  independ- 
ent one,  but  a  parasite  which,  like  the  chameleon, 
takes  the  hue  of  the  thing  with  which  it  is  connected. 
Attached  to  commercial  paper,  it  becomes  a  commer- 
cial contract,  operating  as  a  contingent  guarantj^  of 
payment,  and  a  transfer  of  the  title  where  the  paper 
is  negotiable;  attached  to  any  other  chose  in  action, 
it  becomes  an  equitable  assignment  of  the  beneficial 
interest  without  recourse  to  the  assignor."  ^ 

The  contract  of  indorsement  is  also  (generally) 
a  double  contract.  It  is  both  an  executed  contract 
transferring  the  title  and  an  executory  contract  guar- 
anteeing that  the  bill  or  note  will  be  paid  at  matiu*ity. 

An  indorsement  in  blank  is  one  consisting  simply 
of  the  signature  of  the  indorser.  The  effect  of  such 
an  indorsement  is  to  render  it  payable  to  whoever 
may  be  its  holder;  it  is  equivalent  to  making  the  bill 
or  note  payable  to  bearer. 

•Patterson  vs.  Paindexter,  6  W.  &  S.  227. 


86  COMIIEBCIAL  LAW 

An  indorsement  in  full  is  one  containing  the  name 
of  the  person  to  whom  payment  is  to  be  made.  Such 
a  note  can  only  be  collected  by  the  payee  named  or 
his  endorsee,  and  can  only  be  transferred  by  an- 
other indorsement. 

Tli(^  rightful  holder  of  a  bill  or  note  indorsed  in 
blank  may  himself  change  such  indorsement  into  an 
indorsement  in  full. 

An  indorsement  ''without  recourse"  is  made  by 
adding  these  or  similar  words  to  the  signature.  By 
such  an  indorsement  the  indorser  transfers  the  title, 
but  docs  not  guarantee  the  payment.  Such  an  in- 
dorser, however,  does  guarantee  the  genuineness  of 
the  signatures  to  the  paper,  and  is  liable  for  all  mis- 
representations which  he  may  have  made. 

An  ordinary  indorser  is  in  general  liable,  in  all 
cases  for  the  payment  of  the  bill  or  note,  but  his  lia- 
bilit}^  is  a  secondary  one,  and  proper  steps  must  be 
taken  to  charge  him.  It  is  only  recently,  however, 
that  the  principle  that  an  indorser  is  to  be  held  liable 
for  the  payment  of  a  bill  or  note  began  to  be  en- 
forced; it  was  not  recognized  under  the  Law  Mer- 
chant. 

Section  80.    Presentment  and  Protest. 

Presentment  and  protest  ai*e  necessary  to  charge 
the  parties  secondarily  liable  on  a  bill  or  note.  Two 
presentments  are  necessary  in  the  case  of  a  bill  of 
exchange,  the  first  for  acceptance,  and  the  second  for 
payment.  When  a  bill  is  payable  on  demand,  or 
when  the  presentment  for  acceptance  is  delayed  until 
the  day  of  maturity,  the  two  presentments  are 
merged  into  one. 


BILLS  AND  NOTES  87 

Only  one  presentment  is  required  in  the  case  of  a 
promissory  note — the  presentment  for  payment. 

The  presentment  must  be  made  by  the  holder,  or 
his  authorized  agent  (who  may  be  anybody)  to  the 
drawee  or  maker  or  his  authorized  agent.  If  the 
drawee  or  maker  is  a  partnership,  presentment  may 
be  made  to  a  single  partner,  but  if  there  are  several 
drawees  or  makers  who  are  not  partners,  the  bill  or 
note  should  be  presented  to  all.  If  such  parties  are 
only  jointly  liable,  and  the  first  party  to  whom  it  is 
presented  refuses  to  accept  or  pay,  this  may  be 
treated  as  a  dishonor. 

The  presentment  should  be  at  the  place  of  busi- 
ness of  the  drawee  or  maker,  or  if  he  has  no  regular 
place  of  business,  at  his  domicile.  The  presentment 
should  be  made  during  ordinary  business  houi's.  The 
time  or  place  of  presentment  is  only  material  where 
no  answer  is  received.  If  an  answer  is  actually  re- 
ceived at  any  time  or  place,  the  presentment  is  good. 
The  pei'son  making  the  presentment  should  have  the 
bill  or  note  with  him  to  exhibit  it,  at  least  if  requested 
to  do  so. 

A  person  making  a  presentment  for  payment 
should  exercise  due  diligence  in  any  event,  and  he 
should  endeavor  not  to  time  his  presentment  so  as  to 
make  it  impossible  for  the  one  to  whom  presentment 
is  made  to  meet  the  payment,  nor  should  he  manage 
the  presentment  so  as  to  take  the  maker  or  acceptor 
off  his  guard. 

In  case  of  the  death  of  the  maker  or  acceptor, 
the  presentment  should  be  to  the  personal  repre- 
sentative of  the  deceased. 

In  case  of  presentment,  for  payment,  and  ''dis- 


88  COMMERCIAL  LAW 

honor" — i.  e.,  refusal  or  failure  to  pay,  it  is  neces- 
sary to  give  notice  to  all  parties  secondarily  liable. 
Such  notice  may  be  either  oral  or  in  writing,  but 
must  be  sufficient  to  inform  the  person  to  whom  it  is 
given  that  the  acceptor  or  maker  has  failed  to  pay 
the  bill  or  note,  and  that  the  holder  of  such  paper 
looks  to  him  for  payment.  Such  notice  must  be 
given,  or  sent,  within  twenty-fom^  hours  after 
dishonor.  • 

The  failure  to  make  proper  presentment  or  to 
give  proper  notice  releases  the  parties  secondarily 
liable  from  liability,  but  does  not  affect  the  liability 
of  those  who  are  primarily  liable  for  the  payment 
of  the  bill  or  note. 

Section  81.    Protest. 

*'A  foreign  bill  of  exchange  that  has  been  dis- 
honored must  be  regularly  protested  as  a  prelimi- 
nary to  the  sending  out  of  the  notice  of  dishonor; 
therefore  its  presentment  must  be  made  by  one  who 
is  a  notary  public,  as  the  certificate  of  the  protest  of 
the  notary  is  recognized  as  satisfactory  proof  of  the 
statements  that  the  certificate  should  properly  con- 
tain, and  the  act  of  the  notary  in  so  acting  is  uni- 
versally recognized.  Where  a  foreign  note  has  been 
indorsed,  the  protest  of  the  note  by  a  notary  is  neces- 
sary, according  to  the  weight  of  authority.  An 
inland  bill  or  note,  unindorsed,  need  not  be  protested 
by  a  notary,  but  the  statutes,  however,  permit  the 
notary  public  to  protest  the  inland  bill  and  note, 
after  the  same  fashion  as  in  writing  up  his  certificate 
of  protest  on  a  foreign  bill.  It  is  a  common  custom, 
therefore,  of  banks  and  other  handlers  of  nego- 


BILLS  AND  NOTES  89 

tiable  paper  to  employ  a  notary  public  as  their  agent 
to  act  in  the  particular  of  presenting  negotiable 
paper  and  where  it  is  dishonored  of  protesting  and 
sending  out  the  notice  of  dishonor  to  persons  sec- 
ondarily liable. 

The  emplojrment  of  a  notary  in  such  a  case,  while 
sanctioned,  is  not  made  necessary;  it  is  done  as  a 
matter  of  convenience.  Nor  is  it  necessary  that  the 
notice  of  dishonor  be  sent  out  by  the  notary,  al- 
though this  is  customarily  a  part  of  the  duties  of  his 
office  by  the  private  agreement  of  his  employers. 
The  notary's  certificate  contains  his  declaration  in 
formal  language,  usually,  and  under  a  written  copy 
of  the  note  or  bill  in  question  stating  that 
he  has  made  presentment  and  demand  of  pay- 
ment, and  that  the  pajnnent  has  been  refused, 
together  with  the  reason  for  the  refusal,  time, 
and  the  fact  that  he  therefore  protests  the 
paper.  The  notary  then  attaches  his  seal  of 
office  to  the  certificate  of  protest  and  signs  the 
same.  The  main  purpose  served  by  the  certificate  is 
to  afford  to  the  holder  the  legal  testimony  on  the 
facts  properly  contained  therein,  in  an  action  on  the 
paper  against  those  secondarily  liable."^ 

Section  82.    Excuses  for  Failure  to  Present,  Give 
Notice  or  Protest. 

Presentment,  protest  or  notice,  may  be  waived, 
but  such  waiver  must  be  by  the  party  who  would  be 
charged  by  such  presentment,  notice  or  protest,  and 
not  by  the  drawee,  acceptor,  or  maker.  War,  riots,  or 
anything  which  causes  a  complete  cessation  of  busi- 

•  a  B.  Neltnor  in  Law  Library,  Vol,  IX,  p.  57. 


90  COMMERCIAL  LAW 

ness  may  excuse  presentment,  notice,  or  protest.  In 
such  cases,  these  steps  must  be  taken  as  soon  as 
practical.  The  extreme  illness,  or  the  death  of  the 
holder  on  the  eve  of  presentment  will  furnish  a 
temporary  excuse. 

If  an  indorser  indorses  a  void  note,  he  is  liable 
on  his  implied  guaranty  and  cannot  escape  liability 
for  lack  of  presentment,  protest,  and  notice,  as  he 
cannot  expect  that  the  note  will  be  honored  under 
such  circumstances.  If  the  address  of  the  maker 
of  a  note  is  unknown  and  cannot  be  found  out  by 
the  exercise  of  due  diligence,  or  the  same  is  true 
as  to  the  acceptor  of  a  bill,  presentment  will  be  ex- 
cused and  the  paper  may  be  protested  and  notice 
sent  out  to  the  indorsers  or  the  drawer. 

Section  83.    Defenses  to  Bills  and  Notes. 

Defenses  to  bills  and  notes  are  divided  into  real 
defenses  and  personal  defenses.  Real  defenses  are 
such  as  grow  out  of  some  defect  inherent  in  the  in- 
strument itself.  Personal  defenses  are  those  which 
grow  out  of  acts  which  between  privy  parties  will 
invalidate  the  transfer  or  prevent  the  enforcement 
of  the  instrument,  but  which  do  not  attach  to  or 
invalidate  the  instrument  itself. 

Tlie  most  important  real  defenses  are  the  fact 
that  the  party  making  it  was  incompetent  to  do  so; 
that  the  bill  or  note  is  one  declared  void  by  statute ; 
or  that  the  instrument  has  been  forged  or  materially 
altered. 

Among  the  important  personal  defenses  are 
fraud,  duress,  mistake,  and  failure  of  considera- 
tion.   Tlie  principles  governing  such  defenses  in  the 


BILLS  AND  NOTES  91 

case  of  bills  and  notes  are  those  governing  these  de- 
fenses in  the  case  of  other  contracts.  Another  per- 
sonal defense,  is  the  payment  of  the  instrument  be- 
fore maturity  but  without  the  surrender  of  such 
instrimient. 

Section  84.   Bona  Fide  Holders  for  Value. 

A  bona  fide  holder  for  value  of  a  bill  or  note  is 
one  who  has  purchased  it  for  a  valuable  considera- 
tion before  maturity  without  notice  of  any  defenses 
thereto.  The  valuable  consideration  may  not  be 
equal  to  the  amount  called  for  by  the  bill  or  note 
but  a  very  great  discrepancy  would  have  weight  as 
showing  lack  of  good  faith  on  the  part  of  the  party 
purchasing  said  paper.  The  states  are  divided  on 
the  question  whether  or  not  a  person  who  takes  a 
note  in  payment  for  a  pre-existing  debt  is  a  bona  fide 
holder  for  value.  The  bona  fide  holder  for  value 
takes  the  paper  free  from  all  personal  defenses,  but 
subject  to  any  real  defenses  which  may  exist.  After 
negotiable  paper  has  once  passed  into  the  hands  of  a 
bona  fide  holder  for  value  it  may  be  transferred  free 
from  liability  from  any  personal  defense  to  any  per- 
son whatsoever  (except  of  course,  previous  holders 
of  the  paper)  even  if  such  person  had  knowledge  of 
the  existing  defenses  or  equities  as  they  are  some- 
times called. 

Section  85.    Accomodation  Paper. 

Accomodation  paper  is  negotiable  paper  which 
does  not  represent  any  real  transaction  or  indebted- 
ness between  the  parties  but  where  one  party  signs 
as  maker,  endorser,  or  acceptor,  for  the  purpose  of 


92  COMMERCIAL  LAW 

giving  his  credit  to  the  party  to  the  paper  who  de- 
sire to  have  it  discounted.  As  regards  third  parties, 
the  liability  of  all  parties  to  accomodation  paper 
is  not  single  as  in  other  classes  of  negotiable  paper 
but  as  between  the  parties  themselves  the  true  state 
of  affairs  can  always  be  shown.  For  a  further  dis- 
cussion of  accomodation  paper,  see  the  volume  on 
Ciu'rency,  Banking,  and  Exchange,  section  62. 

Section  86.   Checks. 

*'A  check  is  a  draft  or  order  on  a  bank  or  banker, 
purporting  to  be  drawn  on  a  deposit  of  funds,  for 
the  payment,  at  all  events,  of  a  certain  sum  of 
money  to  a  certain  person  therein  named,  or  to  him 
or  his  order,  or  to  bearer,  and  payable  instantly  on 
demand.''^ 

A  check  closely  resembles  an  inland  bill  of  ex- 
change payable  on  demand  and  is  governed  by  the 
same  rules  in  relation  to  transfer,  endorsement  and 
negotiability.  The  payee  of  the  check  acquires  no 
rights  against  the  bank  against  which  it  is  drawn. 
This  is  true,  even  although  the  bank  has  funds  of  the 
drawer  of  the  check. 

The  rights  of  action  for  damages  in  such  a  case 
belongs  to  the  drawer  of  the  check. 

The  certification  of  a  check  entirely  changes  the 
relation  of  the  parties.  By  certification,  the  bank 
becomes  the  debtor  of  the  payee  of  the  check  to  the 
amount  of  the  check. 

If  a  bank  should  fail  after  certification  and  before 
payment  of  the  check,  the  loss  falls  upon  the  payee. 

In  general,  the  rules  in  force  as  to  presentment, 

'Norton  on  Bills  and  Notes. 


BILLS  AND  NOTES  93 

notice  and  protest  of  checks  are  the  same  as  in  the 
case  of  bills  of  exchange  and  promissory  notes.  But 
there  is  in  this  connection,  this  distinction,  between 
a  check  and  a  bill  of  exchange ;  the  want  of  due  pre- 
sentment or  notice  of  dishonor  of  a  check  does  not 
discharge  the  drawer  unless  he  has  suffered  some 
loss  or  injury  thereby. 

Section  87.     The  Uniform  Negotiable  Instrument 

Act. 

The  Uniform  Negotiable  Instrument  Act  is  a  uni- 
form law,  or  rather  code,  covering  the  subject  of 
negotiable  instruments  which  has  been  adopted  by 
the  legislatures  of  a  majority  of  the  states  of  this 
coimtry.  In  a  few  states,  as  for  example  Illinois, 
some  slight  changes  have  been  made  in  the  text  of 
the  Act.  This  Act  was  suggested  and  is  in  the  main 
based  upon  the  English  Bills  of  Exchange  Act,  which 
was  adopted  in  1882. 

The  text  of  the  American  Uniform  Negotiable 
Instriunent  Act  is  as  follows: 

UNLPORM  NEGOTIABLE  INSTRUMENT  ACT. 

Article  I.— Form  and  Interpretation. 

[Negotiable  Instrument  Must  Conform  to  What 
Requirements.]  §  1.  An  instrument  payable  in 
money,  to  be  negotiated,  must  conform  to  the  follo^v- 
ing  requirements: 

1.  It  must  be  in  writing  and  signed  by  the 
maker  or  drawer. 

2.  Must  contain  an  unconditional  promise  or 
order  to  pay  a  sum  certain  in  money. 


94  COMMERCIAL  LAW 

3.  Must  be  payable  on  demand  or  at  a  fixed  oi 
determinable  future  time. 

4.  Must  be  payable  to  order  or  to  bearer,  and, 

5.  Wliere  the  instrument  is  addressed  to  a 
drawee,  lie  must  be  named  or  otherwise  indicated 
therein  with  reasonable  certainty. 

[Sum  Payable  Within  the  Act.]  §  2.  The  sum 
payable  is  a  sum  certain  within  the  meaning  of 
this  act,  although  it  is  to  be  paid: 

1.  With  interest;  or 

2.  By  stated  installments;  or 

3.  By  stated  installments,  with  a  provision  that 
upon  default  in  payment  of  any  installment,  or  of 
interest,  the  whole  shall  become  due;  or 

4.  With  exchange,  whether  at  a  fixed  rate  or  at 
the  current  rate;  or 

5.  With  costs  of  collection  or  an  attorney's  fee, 
in  case  payment  shall  not  be  made  at  maturity. 

[Promise  to  Pay — ^Unconditional — ^What  Con- 
stitutes.] §  3.  An  unqualified  order  or  promise  to 
pay  is  unconditional  within  the  meaning  of  this  act, 
though  coupled  with: 

1.  An  indication  of  a  particular  fund  out  of 
which  reimbm*sement  is  to  be  made,  or  a  particular 
account  to  be  debited  with  the  amount;  or 

2.  A  statement  of  the  transaction  which  gives 
rise  to  the  instrument. 

But  an  order  or  promise  to  pay  out  of  a  particular 
fund  is  not  unconditional. 

[Time  Payable.]  §  4.  An  instrument  is  pay- 
able at  a  determinable  future  time,  within  the 
meaning  of  this  act,  which  is  expressed  to  be 
payable : 


BILLS  AND  JN^OTES  95 

1.  At  a  fixed  period  after  date  or  sight;  or 

2.  On  or  before  a  fixed  or  determinable  future 
time  specified  therein;  or 

3.  On  or  at  a  fixed  period  after  the  occurrence 
of  a  specified  event,  which  is  certain  to  happen, 
though  the  time  of  happening  be  imcertain. 

An  instrument  payable  upon  a  contingency  is 
not  negotiable,  and  the  happening  of  the  event  does 
not  cure  the  defect. 

[Negotiability — Affected  by  Including  Act  Ad- 
ditional to  Payment.]  §  5.  An  instrument  which 
contains  an  order  or  promise  to  do  an  act  in  addition 
to  the  payment  of  money  is  not  negotiable  under 
this  act.  But  the  negotiable  character  of  an  instru- 
ment otherwise  negotiable  is  not  affected  by  a 
provision  which: 

1.  Authorizes  the  sale  of  collateral  securities 
in  case  the  instrument  be  not  paid  at  maturity;  or 

2.  Authorizes  a  confession  of  judgment  if  the 
instrument  be  not  paid  at  matui'ity;  or 

3.  Waives  the  benefit  of  any  law  intended  for 
the  advantage  or  protection  of  the  obligor;  or 

4.  Gives  the  holder  an  election  to  require  some- 
thing to  be  done  in  lieu  of  payment  of  money. 

But  nothing  in  this  section  shall  validate  any 
provision  or  stipulation  otherwise  illegal  or  authorize 
the  waiver  of  exemptions  from  execution. 

[Validity  and  Negotiability,  How  Not  Affected.] 
§  6.  The  validity  and  negotiable  character  of  an 
instrument  are  not  affected  by  the  fact  that: 

1.  It  is  not  dated;  or 

2.  Does  not  specify  the  value  given,  or  that 
any  value  has  been  given  therefor;  or 


96  COMMERCIAL  LAW 

3.  Does  not  specify  the  place  where  it  is  drawn 
or  the  place  where  it  is  payable;  or 

4.  Bears  a  seal;  or 

5.  Designates  a  particular  kind  of  current 
money  in  which  payment  is  to  be  made. 

[Payable  on  Demand.]  §  7.  An  instrument  is 
payable  on  demand: 

1.  Where  it  is  expressed  to  be  payable  on  de- 
mand or  at  sight,  or  on  presentation;  or 

2.  In  which  no  time  for  pajnnent  is  expressed. 

"Where  an  instrmnent  is  issued,  or  accepted  or  in- 
dorsed when  over  due,  it  is,  as  regards  the  person  so 
issuing,  accepting  or  indorsing  it,  payable  on 
demand. 

[Payable  to  Order.]  §  8.  The  instrument  is 
payable  to  order  where  it  is  drawn  payable  to  the 
order  of  a  specified  person  or  to  him  or  his  order. 
It  may  be  drawn  payable  to  the  order  of: 

1.  A  payee  who  is  not  maker,  drawer  or 
drawee;  or 

2.  The  drawer  or  maker;  or 

3.  The  drawee;  or 

4.  Two  or  more  payees  jointly;  or 

5.  One  or  some  of  several  payees;  or 

6.  The  holder  of  an  office  for  the  time  being. 

7.  An  instrument  payable  to  the  estate  of  a  de- 
ceased person  shaU  be  deemed  payable  to  the  order 
of  the  administrator  or  executor  of  his  estate. 

Where  the  instrument  is  payable  to  order,  the 
payee  must  be  named  or  otherwise  indicated  therein 
with  reasonable  certainty. 

[Payable  to  Bearer.]  §  9.  The  instrument  is 
payable  to  bearer: 


BILLS  AND  NOTES  97 

1.  When  it  is  expressed  to  be  so  payable;  or 

2.  When  it  is  payable  to  a  person  named  therein 
or  bearer;  or 

3.  When  it  is  payable  to  the  order  of  a  ficti- 
tious or  non-existing  person,  and  such  fact  was 
known  to  the  person  making  it  so  payable;  or 

4.  When  the  name  of  the  payee  does  not  pur- 
port to  be  the  name  of  any  person;  or 

5.  When  the  only  or  last  endorsement  is  an  en- 
dorsement in  blank. 

[Need  Not  FoUow  Words  of  Statute.]  §  10. 
The  negotiable  instrument  need  not  follow  the  lan- 
guage of  this  act,  but  any  terms  are  sufficient  which 
clearly  indicate  an  intention  to  conform  to  the  re- 
quirements thereof. 

[Date  Deemed  Date.]  §  11.  When  the  instru- 
ment or  an  acceptance  or  any  indorsement  thereon 
is  dated,  such  date  is  deemed  prima  facie  to  be  the 
true  date  of  the  making,  drawing,  acceptance  or 
indorsement,  as  the  case  may  be. 

[Antedated,  or  Post-Dated  Instrument  Takes 
Effect  from  Delivery.]  §  12.  The  instrument  is 
not  invalid  for  the  reason  only  that  it  is  ante-dated 
or  post-dated,  provided  this  is  not  done  for  an 
illegal  or  fraudulent  purpose.  The  person  to  whom 
an  instrument  so  dated  is  delivered  acquires  the  title 
thereto  as  of  the  date  of  delivery. 

[Undated— Any  Holder  May  Insert  Date.]  §  13. 
Wlien  an  instrument  expressed  to  be  payable  at  a 
fixed  period  after  date  is  issued  undated,  or  where 
the  acceptance  of  an  instrument  payable  at  a  fixed 
period  after  sight  is  undated,  any  holder  may  insert 
therein  the  true  date  of  issue  or  acceptance,  and  the 


98  COMMEECIAL  LAW 

instrument  shall  be  payable  accordingly.  The  inser- 
tion of  a  wrong  date  does  not  avoid  the  instrument 
in  the  hands  of  a  subsequent  holder  in  due  course, 
but  as  to  him,  the  date  so  inserted  is  to  be  regarded 
as  the  true  date. 

[Signed  in  Blank,  May  be  Filled  by  Holder  After 
Delivery.]  §  14.  Where  the  instrument  is  wanting 
in  any  material  particular,  the  person  in  possession 
thereof  has  a  prima  facie  authority  to  complete  it 
by  filling  up  the  blanks  therein.  And  a  signature 
on  a  blank  paper  delivered  by  the  person  making 
the  signature  in  order  that  the  paper  may  be  con- 
verted into  a  negotiable  instrument  operates  as  a 
prima  facie  authority  to  fill  it  up  as  such  for 
any  amount.  In  order,  however,  that  any  such  in- 
strument when  completed  may  be  enforced  against 
any  person  who  became  a  party  thereto  prior  to  its 
completion,  it  must  be  filled  up  strictly  in  ac- 
cordance with  the  authority  given  and  within  a 
reasonable  time.  But  if  any  such  instrument,  after 
completion,  is  issued  or  negotiated  to  a  holder  in 
due  course  it  is  valid  and  effectual  for  all  purposes 
in  his  hands,  and  he  may  enforce  it  as  if  it  had  been 
filled  up  strictly  in  accordance  with  the  authority 
given  and  within  a  reasonable  time. 

[Incomplete  Instrument  Negotiated  Without 
Authority,  Void.]  §  15.  Where  an  incomplete  in- 
strument has  not  been  delivered  it  will  not,  if  com- 
pleted and  negotiated,  without  authority,  be  a  valid 
contract  in  the  hands  of  any  holder,  as  against  any 
person  whose  signature  was  placed  thereon  before 
delivery. 

[Delivery  Required — When  Presumed.]     §    16. 


BILLS  AND  NOTES  99 

Every  contract  on  a  negotiable  instrument  is 
incomplete  and  revocable  until  delivery  of  the  in- 
strument for  the  purpose  of  giving  effect  thereto. 
As  between  immediate  parties,  and  as  regards  a 
remote  party  other  than  a  holder  in  due  course,  the 
delivery,  in  order  to  be  effectual,  must  be  made 
either  by  or  under  the  authority  of  the  party  making, 
drawing,  accepting  or  indorsing,  as  the  case  may  be ; 
and  in  such  case  the  delivery  may  be  shown  to  have 
been  conditional  or  for  a  special  purpose  only,  and 
not  for  the  purpose  of  transferring  the  property  in 
the  instrument.  But  where  the  instrument  is  in  the 
hands  of  a  holder  in  due  course,  a  valid  delivery 
thereof  by  all  parties  prior  to  him  so  as  to  make 
them  liable  to  him,  is  conclusively  presumed.  And 
where  the  instrmnent  is  no  longer  in  the  possession 
of  a  party  whose  signature  appears  thereon,  a  valid 
and  intentional  delivery  by  him  is  presumed  until 
the  contrary  is  proved. 

[Ambiguities  and  Omissions — Rules  of  Construc- 
tion.] §  17.  Where  the  language  of  the  instrument 
is  ambiguous,  or  there  are  omissions  therein,  the 
following  rules  of  construction  apply: 

1.  Where  the  sum  payable  is  expressed  in  words 
and  also  in  figures  and  there  is  a  discrepancy  be- 
tween the  two,  the  sum  denoted  by  the  words  is  the 
sum  payable;  but  if  the  words  are  ambiguous  or 
uncertain,  reference  may  be  had  to  the  figures  to  fix 
the  amount. 

2.  Where  the  instrument  provides  for  the  pay- 
ment of  interest,  without  specifying  the  date  from 
which  interest  is  to  run,  the  interest  runs  from  the 


100  COMMEECIAL  LAW 

date  of  the  instrument,  and  if  the  instrument  is  un- 
dated, from  the  issue  thereof. 

3.  Where  the  instrument  is  not  dated,  it  will  be 
considered  to  be  dated  as  of  the  time  it  was  issued. 

4.  Where  there  is  conflict  between  the  written 
and  printed  provisions  of  the  instrument,  the  writteji 
pro-vdsions  prevail. 

5.  Where  the  instrument  is  so  ambiguous  that 
there  is  doubt  whether  it  is  a  bill  or  a  note,  the 
holder  may  treat  it  as  either,  at  his  election. 

6.  AVliere  a  signature  is  so  placed  upon  the 
instrument  that  it  is  not  clear  in  what  capacity  the 
person  making  the  same  intended  to  sign,  he  is  to  be 
deemed  an  indorser. 

7.  Where  an  instrument  containing  the  words 
"I  promise  to  pay^'  is  signed  by  two  or  more  per- 
sons, they  are  deemed  to  be  jointly  and  severally 
liable  thereon. 

[Signature — Trade  or  Assmned  Name.]  §  18. 
No  person  is  liable  on  the  instrument  whose 
signature  does  not  appear  thereon,  except  as  herein 
otherwise  expressly  provided.  But  one  who  signs  in 
a  trade  or  assumed  name  will  be  liable  to  the  same 
extent  as  if  he  had  signed  his  own  name. 

[May  be  Signed  by  Agent.]  §  19.  The  signature 
of  any  party  may  be  made  by  a  duly  authorized 
agent.  No  particular  form  of  appointment  is  neces- 
sary for  this  purpose;  and  the  authority  of  the  agent 
may  be  established  as  in  other  cases  of  agency. 

[Descriptive  Words  Added  to  Signature — When 
Surplusage.]  §  20.  Where  the  instriunent  contains, 
or  a  person  adds  to  his  signature,  words  indicating 
that  he  signs  for  or  on  behalf  of  the  principal,  or  in 


BILLS  AND  XOTES  101 

a  representative  capacity,  he  is  not  liable  on  the 
instrument  if  he  was  duly  authorized;  but  the  mere 
addition  of  words  describing  him  as  agent,  or  as  fill- 
ing a  representative  character  without  disclosing  his 
principal,  does  not  exempt  him  from  personal 
liability. 

[Signature  by  Procuration — Notice  of  Limited 
Authority.]  §  21.  A  signature  by  "procuration" 
operates  as  notice  that  the  agent  has  but  limited 
authority  to  sign,  and  the  principal  is  bound  in  case 
the  agent  in  so  signing  acted  within  the  actual  limits 
of  his  authority. 

[Assignment  by  Infant  or  Corporation  Passes. 
Title.]  §  22.  The  indorsement  or  assignment  of  the 
instrument  by  a  corporation  or  by  an  infant  passes 
the  property  therein,  notwithstanding  that  from 
want  of  capacity  the  corporation  or  infant  may  incur 
no  liability  thereon. 

[Forged  Signature.]  §  23.  Where  a  signature 
is  forged  or  made  without  authority  it  is  wholly  in- 
operative, and  no  right  to  retain  the  instrument  or 
to  give  a  discharge  thereof,  or  to  enforce  payment 
thereof  against  any  party  thereto,  can  be  acquired 
through  or  under  such  signatiu-e,  unless  the  party 
against  whom  it  is  sought  to  enforce  such  right  is 
precluded  from  setting  up  the  forgery  or  want  of 
authority. 

Article  II. — Consideration. 

[Consideration  Presumed.]  §  24.  Every  nego- 
tiable instriunent  is  deemed  prima  facie  to  have  been 
issued  for  a  valuable  consideration,  and  every  person 


102  COMMERCIAL  LAW 

whose  signature  appears  thereon  to  hare  bectaae  a 
party  thereto  for  value. 

[Consideration — V  a  1  u  e — Pre-Existing  Claim.] 
§  25.  Value  is  any  consideration  sufficient  to  sup- 
port a  simple  contract. 

2.  An  antecedent  or  pre-existing  claim,  whether 
for  money  or  not,  constitutes  value  where  an  instru- 
ment is  taken  either  in  satisfaction  therefor  or  as 
security  therefor  and  is  deemed  such,  whether  the 
instrument  is  payable  on  demand  or  at  a  future  time. 

[Holder  for  Value.]  §  26.  Where  value  has  at 
any  time  been  given  for  the  instrument,  the  holder 
is  deemed  a  holder  for  value  in  respect  to  all  parties 
who  became  such  prior  to  that  time. 

[Value  Presumed  to  Extent  of  Lien.]  §  27. 
Whether  the  holder  has  a  lien  on  the  instrument 
arising  either  from  contract  or  by  implication  of  law, 
he  is  deemed  a  holder  for  value  to  the  extent  of  his 
lien. 

[Absence  or  Failure  of  Consideration  as  De- 
fense.] §  28.  Absence  or  failure  of  consideration 
is  a  matter  of  defense  as  against  any  person  not  a 
holder  in  due  course,  and  partial  failure  of  considera- 
tion is  a  defense  pro  tanto,  whether  the  failure  is 
an  ascertained  and  liquidated  amount  or  otherwise. 

[Accommodation  Paper — ^Liabilities.]  §  29.  An 
accommodation  party  is  one  who  has  signed  the  in- 
strument as  maker,  drawer,  acceptor,  or  indorser, 
for  the  purpose  of  lending  his  name  to  some  other 
person.  Such  a  person  is  liable  on  the  instrument  to 
a  holder  for  value,  notwithstanding  such  holder  at 
the  time  of  taking  the  instrument  knew  him  to  be 
only  an  accommodation  party,  and  in  case  a  transfer 


BILLS  AND  NOTES  103 

after  maturitj  was  intended  by  the  accommodating 
party  notwithstanding  such  holder  acquired  title 
after  maturity. 

Article  III. — Negotiation. 

[Negotiation — How  Completed.]  §  30.  An  in- 
strument is  negotiated  when  it  is  transferred  from 
one  person  to  another  in  such  manner  as  to  constitute 
the  transferee  the  holder  thereof;  if  payable  to 
bearer,  it  is  negotiated  by  delivery;  if  payable  to 
order,  it  is  negotiated  by  the  indorsement  of  the 
holder,  completed  by  delivery. 

[Indorsement,  How  Made — ^Not  Negatived  by 
Additional  Words.]  §  31.  The  indorsement  must 
be  written  on  the  instrument  itself  or  upon  a  paper 
attached  thereto.  The  signature  of  the  indorser, 
without  additional  words,  is  a  sufficient  indorsement, 
and  the  addition  of  words  of  assignment  or  of 
guaranty  shall  not  negative  the  additional  effect  of 
the  signature  as  an  indorsement  unless  otherwise 
expressly  stated. 

[Indorsement  Must  be  of  Entire  Instrument.] 
§  32.  The  indorsement  must  be  an  indorsement  of 
the  entire  instrument.  An  indorsement  which  pur- 
ports to  transfer  to  the  indorsee  a  part  only  of  the 
amount  payable,  or  which  purports  to  transfer  the 
instrimaent  to  two  or  more  indorsees  severally,  does 
not  operate  as  a  negotiation  of  the  instrument.  But 
where  the  instrument  has  been  paid  in  part,  it  may 
be  indorsed  as  to  the  residue. 

[Indorsement  May  be  Blank,  Special  or  Re- 
strictive.]   §  33.    An  indorsement  may  be  either  in 


104  COMMERCIAL  LAW 

blank  or  special;  and  it  may  also  be  either  restrictive 
or  qualified,  or  conditional. 

[Indorsement  in  Blank  Payable  to  Bearer.] 
§  34.  A  special  indorsement  specifies  the  person  to 
whom  or  to  whose  order  the  instrument  is  to  be 
payable;  and  the  indorsement  of  such  indorsee  is 
necessary  to  the  further  negotiation  of  the  instru- 
ment. An  indorsement  in  blank  specifies  no  indorsee, 
and  an  instrument  so  indorsed  is  payable  to  bearer, 
and  may  be  negotiated  by  delivery. 

[Holder  May  Convert  Blank  Indorsement  Into 
Special.]  §  35.  The  holder  may  convert  a  blank 
indorsement  into  a  special  indorsement  by  writing 
over  the  signature  of  the  indorser  in  blank  any  con- 
tract consistent  with  the  character  of  the  in- 
dorsement. 

[Restrictive  Indorsement,  Elements  of.]  §  36. 
An  indorsement  is  restrictive  which  either: 

1.  Prohibits  the  further  negotiation  of  the 
instrument;  or 

2.  Constitutes  the  indorsee  the  agent  of  the 
indorser;  or 

3.  Vests  the  title  in  the  indorsee  in  trust  for  or 
to  the  use  of  some  other  person.  But  the  mere 
absence  of  words  implying  power  to  negotiate  does 
not  make  an  indorsement  restrictive. 

[Rights  Conferred  by  Restrictive  Indorsement.] 
§  37.  A  restrictive  indorsement  confers  upon  the 
indorsee  the  right: 

1.  To  receive  payment  of  the  instrument. 

2.  To  bring  any  action  thereon  that  the  en- 
dorser could  bring. 

3.  To  transfer  his  rights  as  such  indorsee,  where 


BILLS  AND  NOTES  105 

the  form  of  the  indorsement  authorizes  him  to  do  so. 

But  all  subsequent  indorsees  acquire  only  the 
title  of  the  first  indorsee  under  the  restrictive  in- 
dorsement specified  in  section  36 — sub-section  1 — 
and  as  against  the  principal  or  cestui  que  trust  only 
the  title  of  the  first  indorsee  under  the  restrictive 
indorsements  specified  in  section  36 — sub-section  2 
and  3  respectively. 

[Qualified  Indorsement  Does  Not  Impair  Nego- 
tiability.] §  38.  A  qualified  indorsement  consti- 
tutes the  indorser  a  mere  assignor  of  the  title  to  the 
instrument.  It  may  be  made  by  adding  to  the 
indorser 's  signature  the  words  ** without  recourse" 
or  any  words  of  similar  import.  Such  an  indorse- 
ment does  not  impair  the  negotiable  character  of 
the  instrument. 

[Conditional  Indorsement  Obligatory  on  In- 
dorsee.] §  39.  Where  an  indorsement  is  condi- 
tional, a  party  required  to  pay  the  instrument  may 
disregard  the  condition,  and  make  a  payment  to  the 
indorsee  or  his  transferee,  whether  the  condition  has 
been  fulfilled  or  not.  But  any  person  to  whom  an 
instrument  so  indorsed  is  negotiated,  will  hold  the 
same,  or  the  proceeds  thereof,  subject  to  the  rights 
of  the  person  indorsing  conditionally. 

[Remote  Special  Indorser  Protected.]  §  40. 
Where  an  instrument  originally  payable  to  or  in- 
dorsed specifically  to  bearer  is  subsequently  indorsed 
specially  it  may  nevertheless  be  further  negotiated 
by  delivery;  but  the  person  indorsing  specially  is 
liable  as  indorser  to  only  such  holders  as  make  title 
thi'ough  his  indorsement. 

[When  Payable  to  Several,  All  to  Indorse.]  §  41. 


106  COMMERCIAL  LAW 

Where  an  instrument  is  payable  to  the  order  of  two 
or  more  payees  or  indorsees  who  axe  not  partners,  all 
must  indorse  unless  the  one  indorsing  has  authority 
to  indorse  for  the  others. 

[Paper  Drawn  to  Cashier  Deemed  Payable  to 
His  Bank.]  §  42.  Where  an  instrument  is  drawn 
or  indorsed  to  a  person,  as  ^'Cashier"  or  other  fiscal 
officer  of  a  bank  or  corporation,  it  is  deemed  prima 
facie  to  be  payable  to  the  bank  or  corporation  of 
which  he  is  such  officer;  and  may  be  negotiated  by 
either  the  indorsement  of  the  bank  or  corporation, 
or  the  indorsement  of  the  officer. 

[Indorsement  by  Wrongly  Designated  Payee.] 
§  43.  Where  the  name  of  the  payee  or  indorsee  is 
wrongly  designated  or  misspelled,  he  may  indorse 
the  instrument  as  therein  described,  adding,  if  he 
thinks  fit,  his  proper  signature. 

[Indorsement  in  Representative  Capacity  May 
Negative  Personal  Liability.]  §  44.  Where  any 
person  is  under  obligation  to  indorse  in  a  representa- 
tive capacity,  he  may  indorse  in  such  terms  as  to 
negative  personal  liability. 

[Presumption  of  Negotiation  Before  Maturity.] 
§  45.  Except  where  an  indorsement  bears  date 
after  the  maturity  of  the  instrument,  every  negotia- 
tion is  deemed  prima  facie  to  have  been  effected 
before  the  instrument  was  overdue. 

[Presumptive  Identity  of  Place  of  Indorsement. 
With  Date.]  §  46.  Except  where  the  contrary  ap- 
pears, every  indorsement  is  presumed  prima  facie  to 
have  been  made  at  the  place  where  the  instrument  is 
dated. 

[Negotiability  Continues  Till  Discharge  by  In- 


BILLS  AND  NOTES  107 

dorsement  Payment  or  Otherwise.]  §  47.  An 
instrument  negotiable  in  its  origin  continues  to  be 
negotiable  until  it  has  been  respectively  indorsed  or 
discharged  by  payment  or  otherwise. 

[Owner  May  Strike  Out  Any  Indorsement— Sub- 
sequent Indorsers  Released.]  §  48.  The  owner  may 
at  any  time  strike  out  any  indorsement  which  is  not 
necessary  to  his  title.  The  indorser  whose  indorse- 
ment is  struck  out,  and  all  indorsers  subsequent  to 
him,  are  thereby  relieved  from  liability  on  the 
instrument. 

[Transfer  Without  Indorsement — Title  Ac- 
quired.] §  49.  Where  the  holder  of  an  instrument 
payable  to  his  order  transfers  it  for  value  without  in- 
dorsing it,  the  transferer  vests  in  the  transferee  such 
title  as  the  transferee  had  therein,  and  the  transferee 
acquires,  in  addition,  the  right  to  enforce  the  instru- 
ment against  one  who  signed  for  the  accommodation 
of  the  transferer  and  the  right  to  have  the  indorse- 
ment of  the  transferer  if  omitted  by  accident  or 
mistake.  But  for  the  purpose  of  determining 
whether  the  transferee  is  a  holder  in  due  course,  the 
negotiation  takes  effect  as  of  the  time  when  the 
indorsement  is  actually  made. 

[Prior  Indorser  May  Acquire  and  Reissue  Paper, 
But  Can  Not  Enforce  Against  Intervening  Indors- 
ers.] §  50.  Where  an  instrument  is  negotiated 
back  to  a  prior  party,  such  party  may,  subject  to 
the  provisions  of  this  act,  reissue  and  further  nego- 
tiate the  same,  but  he  is  not  entitled  to  enforce 
payment  thereof  against  any  intervening  party  to 
whom  he  was  personally  liable. 


108  COMMERCIAL  LAW 

Article  IV.— Rights  of  the  Holder. 

[Holder  May  Sue  in  Own  Name.]  §  51.  The 
holder  of  a  negotiable  instrument  may  sue  thereon  in 
his  own  name  and  i)ayment  to  him  in  due  course 
discharges  the  instrument. 

[Holder  in  Due  Course  Defined.]  §  52.  A  holder 
in  due  course  is  a  holder  who  has  taken  the  instru- 
ment under  the  following  conditions: 

1.  That  it  is  complete  and  regular  upon  its  face; 

2.  That  he  became  the  holder  of  it  before  it  was 
overdue,  and  without  notice  that  it  has  been 
previously  dishonored,  if  such  was  the  fact. 

3.  That  he  took  it  in  good  faith  and  for  value. 

4.  That  at  the  time  it  was  negotiated  to  him  he 
had  no  notice  of  any  infirmity  in  the  instrument  or 
defect  in  the  title  of  the  j)erson  negotiating  it. 

[Demand  Paper  Must  Be  Negotiated  Within 
Reasonable  Time  to  Confer  Rights.]  §  53.  Where 
an  instriunent  payable  on  demand  is  negotiated  an 
unreasonable  length  of  time  after  its  issue,  the  holder 
is  not  deemed  a  holder  in  due  course. 

[Transferee  Receiving  Notice  of  Infirmity  After 
Partial  Payment  Protected  Only  Pro  Tanto.]  §  54. 
Where  the  transferee  receives  notice  of  any  infirmity 
in  the  instrument  or  defect  in  the  title  of  the  person 
negotiating  the  same  before  he  has  paid  the  full 
amount  agreed  to  be  paid  therefor,  he  will  be  deemed 
a  holder  in  due  course  only  to  the  extent  of  the 
amount  therefore  paid  by  him. 

[Title  Defective  Through  Obtaining  Instrument 
or  Signature  Through  Fraud  or  Duress.]  §  55.  The 
title  of  a  person  who  negotiates  an  instrument  is 


BILLS  AND  NOTES  109 

defective  within  the  meaning  of  this  act  when  he 
obtained  the  instrument,  or  any  signature  thereto, 
by  fraud,  duress,  or  force  and  fear,  or  other  unlawful 
means,  or  for  an  illegal  consideration  or  when  he 
negotiates  it  in  breach  of  faith,  or  under  such  circum- 
stances as  amount  to  a  fraud. 

[Notice  of  Infirmity — What  Constitutes.]  §  56. 
To  constitute  notice  of  an  infirmity  in  the  instrument 
or  defect  in  the  title  of  the  person  negotiating  the 
same,  the  person  to  whom  it  is  negotiated  must  haA^e 
had  actual  knowledge  of  the  infirmity  or  defect,  or 
knowledge  of  such  facts  that  his  action  in  taking  the 
instrument  amounted  to  bad  faith. 

[Rights  of  a  Holder  in  Due  Course.]  §  57.  A 
holder  in  due  course  holds  the  instrument  free  from 
any  defect  of  title  of  prior  parties,  and  free  from 
defenses  available  to  prior  parties  among  themselves 
and  may  enforce  payment  of  the  instrument  for  the 
full  amount  thereof  against  all  parties  liable  thereon 
(except  the  defect  and  defense  specified  in  section 
10  of  act  entitled  "An  act  to  revise  the  law  in  relation 
to  promissory  notes,  bonds,  due  bills  and  other  in- 
struments in  writing,''  approved  March  18,  1874,  in 
force  July  1, 1874,  and  except  the  defect  and  defense 
specified  in  sections  131  and  136  of  an  act  to  revise 
the  law  in  relation  to  criminal  jurisprudence,  ap- 
proved March  27,  1874,  in  force  July  1,  1874,  known 
as  sections  131  and  136  of  Chapter  38  of  the  Revised 
Statutes  of  Illinois,  and  may  enforce  pajonent  of  the 
instrument  for  the  full  amount  thereof  against  all 
parties  liable  thereon.) 

[Rights  of  a  Holder  Deriving  His  Title  Through 
Holder  in  Due  Course.]    §  58.    In  the  hands  of  any 


110  COMMEECIAL  LAW 

holder  other  than  a  holder  in  due  course,  a  negotiable 
instrument  is  subject  to  the  same  defenses  as  if  it 
were  non-negotiable.  But  the  holder  who  derives 
his  title  through  a  holder  in  due  course,  and  who  is 
not  himself  a  party  to  any  fraud  or  duress  or  illegal- 
ity affecting  the  instrument,  has  all  the  rights  of  such 
former  holder  in  respect  to  all  parties  prior  to  such 
holder. 

[Presumption  in  Favor  of  Holder  in  Due  Course 
— Shifting  Burden — Exception.]  §  59.  Every 
holder  is  deemed  prima  facie  to  be  a  holder  in  due 
course;  but  when  it  is  shown  that  the  title  of  any 
person  who  has  negotiated  the  instrument  was  de- 
fective, the  burden  is  on  the  holder  to  prove  that  he 
or  some  person  under  whom  he  claims  acquired  the 
title  as  a  holder  in  due  course.  But  the  last  men- 
tioned rule  does  not  apply  in  favor  of  a  party  who 
became  bound  on  the  instrument  prior  to  the 
acquisition  of  such  defective  title. 

Article  V. — Liabilities  of  Parties. 

[Engagements  of  Maker.]  §  60.  The  maker  of 
a  negotiable  instrument  by  making  it  engages  that 
he  will  pay  it  according  to  its  tenor,  and  admits  the 
existence  of  the  payee  and  his  then  capacity  to 
indorse. 

[Engagements  of  Drawer.]  §  61.  The  drawer 
by  drawing  the  instrument  admits  the  existence  of 
the  payee  and  his  then  capacity  to  indorse,  and 
engages  that  on  due  presentment  the  instrument  will 
be  accepted  or  paid,  or  both,  according  to  its  tenor, 
and  that  if  it  be  dishonored,  and  the  necessary  pro- 
ceedings on  dishonor  be  duly  taken,  he  will  pay  the 


BILLS  AND  NOTES  111 

amount  thereof  to  the  holder,  or  to  any  indorser  who 
may  be  compelled  to  pay  it.  But  the  drawar  may 
insert  in  the  instrument  an  express  stipulation  nega- 
tiving or  limiting  his  own  liability  to  the  holder. 

[Engagements  of  Acceptor.]  §  62.  The  ac- 
ceptor by  accepting  the  instrmnent  engages  that  he 
will  pay  it  according  to  the  tenor  of  his  acceptance, 
and  admits: 

1.  The  existence  of  the  drawer,  the  genuineness 
of  his  signature,  and  his  capacity  and  authority  to 
draw  the  instrument;  and 

2.  The  existence  of  the  payee  and  his  then 
capacity  to  indorse. 

[Signing  Otherwise  Than  as  Maker,  Drawer  or 
Acceptor  Deemed  an  Indorsement  Unless  Re- 
stricted.] §  63.  A  person  placing  his  signature 
upon  an  instrument  otherwise  than  as  maker,  drawer 
or  acceptor  is  deemed  to  be  an  endorser,  unless  he 
clearly  indicated  by  appropriate  words  his  intention 
to  be  bound  in  some  other  capacity. 

[Liability  of  Indorser  in  Blank  Before  Deliver- 
ing.] §  64.  Where  a  person,  not  otherwise  a  party 
to  an  instrument,  places  thereon  his  signature  in 
blank  before  delivery,  he  is  liable  as  indorser  in 
accordance  with  the  following  rules: 

1.  If  the  instrument  is  payable  to  the  order  of  a 
third  person,  he  is  liable  to  the  payee  and  to  all 
subsequent  parties. 

2.  If  the  instrument  is  payable  to  the  order  of 
the  maker  or  drawer,  or  is  payable  to  bearer,  he  is 
liable  to  all  parties  subsequent  to  the  maker  or 
drawer. 

3.  If  he  signs  for  the  accommodation  of  the 


112  COMMEECIAL  LAW 

payee,  he  is  liable  to  all  parties  subsequent  to  the 
payee. 

[Warranties  Imported  by  Negotiation  by  Deliv- 
ery or  Qualified  Indorsement.]  §  65.  Every  person 
negotiating  an  instrument  by  delivery  or  by  a  qual- 
ified indorsement,  warrants : 

1.  That  the  instrument  is  genuine  and  in  all 
respects  what  it  purports  to  be. 

2.  That  he  has  a  good  title  to  it. 

3.  That  all  prior  parties  had  capacity  to  contract. 

4.  That  he  has  no  knowledge  of  any  fact  which 
would  impair  the  validity  of  the  instrument  or  render 
it  valueless. 

But  when  the  negotiation  is  by  delivery  only,  the 
warranty  extends  in  favor  of  no  holder  other  than  the 
immediate  transferee. 

The  provisions  of  subdivision  three  of  this  section 
do  not  apply  to  persons  negotiating  public  or 
corporate  secui-ities,  other  than  bills  and  notes. 

[Warranties  of  All  Indorsers  Except  Accommo- 
dation Indorsers  With  Qualification.]  §  66.  Every 
indorser  not  an  accommodating  party  who  indorses 
without  qualification,  warrants  to  all  subsequent 
holders  in  due  course: 

1.  The  matters  and  things  mentioned  in  sub- 
division one,  two,  three  and  four  of  the  next  preced- 
ing section;  and 

2.  That  the  instrument  is  at  the  time  of  his 
indorsement  valid  and  subsisting. 

And,  in  addition,  every  indorser  engages  that  on 
due  presentment,  it  shall  be  accepted  or  paid,  or  both, 
as  the  case  may  be,  according  to  its  tenor,  and  that  if 
it  be  dishonored  and  the  necessary  proceedings  on 


BILLS  AXD  NOTES  113 

dishonor  be  duly  taken,  he  will  pay  the  amount 
thereof  to  the  holder,  or  to  any  subsequent  indorser 
who  may  be  compelled  to  pay  it. 

[Indorsement  of  Instrument  Negotiable  By  De- 
livery.] §  67.  Where  a  person  places  his  indorse- 
ment on  an  instrmnent  negotiable  by  delivery  he 
incurs  all  the  liabilities  of  an  indorser. 

[Indorsers  Liable  in  Order  of  Indo5««meErtfi — 
Joint  and  Several  Liability.]  §  68.  As  respects  one 
another,  indorsei-s  are  liable  prima  facie  in  the  order 
in  which  they  indorse;  but  evidence  is  admissible  to 
show  that  as  between  or  among  themselves  they 
have  agreed  otherwise.  All  parties  jointly  liable  on 
a  negotiable  instrument  are  deemed  to  be  jointly  and 
severally  liable. 

[Liability  of  Broker  or  Agent  Negotiating  Instru- 
ment Without  Indorsement.]  §  69.  TMiere  a 
broker  or  other  agent  negotiated  an  instrument  with- 
out indorsement,  he  incurs  all  the  liabilities  pre- 
scribed by  section  sixty-five  of  this  act,  unless  he 
discloses  the  name  of  his  principal,  and  the  fact  that 
he  is  acting  only  as  agent. 

[Measure  of  Damages  on  Protest  of  Bill  Drawn 
or  Indorsed  Within  Tliis  State  and  Payable  Without 
the  State.]  §  69a.  Whenever  any  bill  of  exchange 
drawn  or  indorsed  within  this  state  and  payable 
without  this  state  is  duly  protested  for  non-accept- 
ance or  non-payment,  the  drawer  or  indorser  thereof, 
due  notice  being  given  of  such  non-acceptance  or  non- 
payment, shall  pay  such  bill  at  the  cmrent  rate  of 
exchange  and  with  legal  mterest  from  the  time  such 
bill  ought  to  have  been  paid  until  paid,  together  with 
the  costs  and  charges  of  protest,  and  on  bills  payable 


114  COMMERCIAL  LAW 

in  the  United  States  in  case  suit  has  to  be  brought 
thereon  and  on  bills  payable  without  the  United 
States  with  or  without  suit,  5%  damages  in  addition. 

Article  VI. — Presentment  for  Payment. 

[Presentment,  When  Necessary.]  §  70.  Present- 
ment for  payment  is  not  necessary  in  order  to  charge 
the  person  primarily  liable  on  the  instrument  except 
in  case  of  bank  notes;  but  if  the  instrument  is,  by 
its  terms,  payable  at  a  special  place  and  he  is  able  and 
willing  to  pay  it  there  at  maturity,  such  liability  and 
willingness  are  equivalent  to  a  tender  of  payment 
upon  his  part.  But  except  as  herein  otherwise  pro- 
vided, presentment  for  payment  is  necessary  in  or- 
der to  charge  the  drawer  and  indorsers. 

[Time  of.]  §  71.  Where  the  instrument  is  not 
payable  on  demand,  presentment  must  be  made  on 
the  day  it  falls  due.  Where  it  is  payable  on  demand, 
presentment  must  be  made  within  a  reasonable  time 
after  its  issue,  except  that  in  case  of  a  bill  of  ex- 
change, presentment  for  payment  will  be  sufficient  if 
made  within  a  reasonable  time  after  the  last  negotia- 
tion fchereof. 

[Elements  of  Sufficiency.]  §  72.  Presentment 
for  payment",  to  be  sufficient,  must  be  made: 

1.  By  the  holder,  or  by  some  person  authorized 
to  receive  payment  on  his  behalf. 

2.  At  a  reasonable  hour  on  a  business  day. 

3.  At  a  proper  place  as  herein  defined. 

4.  To  the  person  primarily  liable  on  the  instru- 
ment, or  if  he  is  absent  or  inaccessible,  to  any  person 
found  at  the  place  where  the  presentment  is  made 


BILLS  AND  NOTES  115 

[Requirements  as  to  Place.]  §  73.  Presentment 
for  payment  is  made  at  the  proper  place: 

1.  Where  a  place  of  payment  is  specified  in  the 
instrmnent  and  it  is  there  presented. 

2.  Where  no  place  of  payment  is  specified  and 
the  address  of  the  person  to  make  the  pajment  is 
given  in  the  instrument  and  it  is  there  presented, 

3.  Where  no  place  of  payment  is  specified  and 
no  address  is  given  and  the  instrument  is  presented 
at  the  usual  place  of  business  or  residence  of  the 
person  to  make  payment. 

4.  In  any  other  case,  if  presented  to  the  person 
to  make  payment  wherever  he  can  be  found,  or  if 
presented  at  his  last  known  place  of  business  or 
residence. 

[Exhibition  of  Instrument  and  Delivery  to 
Party  Paying.]  §  74.  The  instrmnent  must  be  ex- 
hibited to  the  person  from  whom  payment  is  de- 
manded, and  when  it  is  paid  must  be  delivered  up  to 
the  party  paying  it. 

[Instrument  Payable  at  Bank  Must  be  Presented 
During  Banking  Hours— Exception.]  §  75.  Where 
the  instrument  is  payable  at  a  bank,  presentment 
for  payment  must  be  made  during  banking  hours, 
unless  the  person  to  make  payment  has  no  funds 
there  to  meet  it  at  any  time  during  the  day,  in  which 
case  presentment  at  any  hour  before  the  bank  is 
closed  on  that  day  is  sufficient. 

[To  Personal  Representative  of  Deceased  Maker 
or  Indorser.]  §  76.  Where  the  person  primarily 
liable  on  the  instrument  is  dead,  and  no  place  of  pay- 
ment is  specified,  presentment  for  payment  must  be 
made  to  his  personal  representative  if  such  there  be, 


116  COMMERCIAL  LAW 

and  if  with  exercise  of  reasonable  diligence,  he  can 
be  found. 

[Presentment  for  Payment  to  Any  One  of  Several 
Partners.]  §  77.  Where  the  persons  primarily 
liable  on  the  instrument  are  liable  as  partners,  and 
no  place  of  pa^Tnent  is  specified,  presentment  for 
paj^ment  may  be  made  to  any  one  of  them,  even 
though  there  has  been  a  dissolution  of  the  firm. 

[Must  be  Made  to  All  Persons  Primarily  Liable 
Who  Are  Not  Partnei-s.]  §  78.  Where  there  are 
several  persons,  not  partners,  primarily  liable  on  the 
instrument,  and  no  place  of  payment  is  specified, 
presentment  must  be  made  to  them  all. 

[To  Drawee  for  Payment  Not  Required  to 
Charge  Drawer  Where  it  Would  be  Unavailing.] 
§  79.  Presentment  for  payment  is  not  required  in 
order  to  charge  the  drawer  where  he  has  no  right  to 
expect  or  require  that  the  drawee  or  acceptor  will 
pay  the  instrument. 

[Not  Required  to  Charge  Indorser  Upon  Paper 
Made  for  His  Accommodation.]  §  80.  Presentment 
for  payment  is  not  required  to  charge  an  indorser 
where  the  instrument  was  made  or  accepted  for  his 
accommodation. 

[Delay  in  Making,  When  Excused.]  §  81.  De- 
lay in  making  presentment  for  payment  is  excused 
when  the  delay  is  caused  by  circumstances  beyond 
the  control  of  the  holder,  and  not  imputable  to  his 
default,  misconduct  or  negligence.  When  the  cause 
of  delay  ceases  to  operate,  presentment  must  be  made 
with  reasonable  diligence. 

['Wlien  Dispensed  With.]  §  82.  Presentment 
for  pa}Tnent  is  dispensed  with : 


BILLS  AND  NOTES  117 

1.  When  after  the  exercise  of  reasonable  dili- 
gence presentment  as  required  by  this  act  cannot  be 
made. 

2.  Where  the  drawee  is  a  fictitious  person. 

3.  By  waiver  of  presentment,  express  or  im- 
plied. 

[Instrument  Dishonored  by  Non-Payment 
When.]  §  83.  The  instrument  is  dishonored  by  non- 
payment when : 

1.  It  is  duly  presented  for  payment  and  pay- 
ment is  refused  or  cannot  be  obtained;  or 

2.  Presentment  is  excused  and  the  instrument 
is  overdue  and  unpaid. 

[Immediate  Right  of  Recom-se  Against  All 
Parties  Secondarily  Liable  Accinies  to  Holder  Upon 
Dishonor  by  Non-Payment.]  §  84.  Subject  to  the 
provisions  of  this  act,  when  the  instrument  is  dis- 
honored by  non-payment,  an  immediate  right  of  re- 
course to  all  parties  secondarily  liable  thereon  ac- 
crues to  the  holder. 

[Time  of  Payment — ^No  Grace — Sundaj^s  and 
Holidays.]  §  85.  Every  negotiable  instriunent  is 
payable  at  the  time  fixed  therein  without  grace. 
When  the  day  of  maturity  falls  upon  Sunday,  or  a 
holiday,  the  instrument  is  payable  upon  the  next  suc- 
ceeding business  day.  Instiiiments  falling  due  on 
Saturday  are  to  be  presented  for  payment  on  the 
next  succeeding  business  day,  except  that  instru- 
ments payable  on  demand  day,  at  the  option  of  tlio 
holder,  be  presented  for  payment  before  12  o'clock 
noon  on  Saturday,  when  that  entire  day  is  not  a  holi^ 
day. 

[Computation  of  Time.]    §  86.    Where  the  instru- 


118  COMMERCIAL  LAW 

ment  is  payable  at  a  fixed  period  after  date,  after 
sight,  or  after  the  happening  of  a  specified  event, 
the  time  of  payment  is  determined  by  excluding  the 
day  from  which  the  time  is  to  begin  to  run,  and  by 
including  the  date  of  payment. 

§  87.  Where  the  instrument  is  made  payable  at 
a  bank,  it  is  equivalent  to  an  order  to  the  bank  to  pay 
the  same  for  the  account  of  the  principal  debtor 
thereon. 

[What  is  Payment  Made  in  Due  Course.]  §  88. 
Payment  is  made  in  due  course  when  it  is  made  at  or 
after  maturity  of  the  instrument  to  the  holder  there- 
of in  good  faith  and  without  notice  that  his  title  is 
defective. 

Article  VII.-— Notice  of  Dishonor. 

[Notice  of  Dishonor  Must  be  Given  Drawer  and 
Each  Indorser.]  §  89.  Except  as  herein  otherwise 
provided,  when  a  negotiable  instrument  has  been 
dishonored  by  non-acceptance  or  non-payment,  no- 
tice of  dishonor  must  be  given  to  the  drawer  and  to 
each  indorser,  and  each  drawer  or  indorser  to  whom 
such  notice  is  not  given  is  discharged. 

[On  Whose  Behalf  Given.]  §  90.  The  notice 
may  be  given  by  or  on  behalf  of  the  holder,  or  by 
or  on  behalf  of  any  party  to  the  instrument  who 
might  be  compelled  to  pay  it  to  the  holder,  and  who, 
upon  taking  it  up,  would  have  a  right  to  reimburse- 
ment from  the  party  to  whom  the  notice  is  given. 

[Notice  May  be  Given  by  Agent.]  §  91.  Notice 
of  dishonor  may  be  given  by  an  agent  either  in  his 
own  name  or  in  the  name  of  any  party  entitled  to 


BILLS  AND  NOTES  119 

give  notice,  whether  that  party  be  his  principal  or 
not. 

[Notice  Given  by  Holder  Inures  for  Benefit  of 
All  Prior  Parties.]  §  92.  Where  notice  is  given  by 
or  on  behalf  of  the  holder,  it  inures  for  the  benefit 
of  all  subsequent  holders  and  all  prior  parties  who 
have  a  right  of  recourse  against  the  party  to  whom 
it  is  given. 

[Notice  Inures  for  Benefit  of  Holder  and  All 
Parties  Subsequent.]  §  93.  Where  notice  is  given 
by  or  on  behalf  of  a  party  entitled  to  give  notice,  it 
inures  for  the  benefit  of  the  holder  and  all  parties 
subsequent  to  the  party  to  whom  notice  is  given. 

[Instrument  Dishonored  in  Hands  of  Agent — 
Notice,  How  Given.]  §  94.  Where  the  instrument 
has  been  dishonored  in  the  hands  of  an  agent,  he  may 
either  himself  give  notice  to  the  parties  liable  there- 
on, or  he  may  give  notice  to  his  principal.  If  he 
gives  notice  to  his  principal,  he  must  do  so  within  the 
same  time  as  if  he  were  the  holder,  and  the  princi- 
pal, upon  the  receipt  of  such  notice,  has  himself  the 
same  time  for  giving  notice  as  if  the  agent  had  been 
an  independent  holder. 

[Written  Notice  May  be  Supplemented  by  Ver- 
bal Communication.]  §  95.  A  written  notice  need 
not  be  signed,  and  an  insufficient  written  notice  may 
be  supplemented  and  validated  by  verbal  communi- 
cation. A  misdescription  of  the  instrument  does  not 
vitiate  unless  the  party  to  whom  the  notice  is  given 
is  in  fact  misled  thereby. 

[Notice  May  be  Written  or  Oral — Personally  or 
Through  Mail.]  §  96.  The  notice  may  be  in  writing 
or  merely  oral  and  may  be  given  in  any  terms  which 


120  COMMERCIAL  LAW 

sufficiently  identify  the  instrument  and  indicate  that 
it  has  been  dishonored  by  non-acceptance  or  non- 
payment. It  may  in  all  cases  be  given  by  delivering 
it  personally  or  through  the  mails. 

[Notice  of  Dishonor  May  be  Given  to  Party  or 
Agent.]  §  97.  Notice  of  dishonor  may  be  given 
either  to  the  party  himself  or  to  his  agent  in  that  be- 
half. 

[Service  of  Notice  Upon  Personal  Representa- 
tive of  Deceased  Party.]  §  98.  Where  any  party  is 
dead,  and  his  death  is  known  to  the  party  giving  no- 
tice, the  notice  must  be  given  to  a  personal  represen- 
tative, if  there  be  one,  and  if  with  reasonable  dili- 
gence he  can  be  found.  If  there  be  no  personal  rep- 
resentative, notice  may  be  sent  to  the  last  residence 
or  last  place  of  business  of  the  deceased. 

[Notice  to  Any  One  of  Several  Partners  Suf- 
ficient.] §  99.  "VMiere  the  parties  to  be  notified  are 
partners,  notice  to  any  one  partner  is  notice  to  the 
firm,  even  though  there  has  been  a  dissolution. 

[Notice  to  Joint  Parties  Not  Partners  to  be 
Given.]  §  100.  Notice  to  joint  parties  who  are  not 
partners  must  be  given  to  each  of  them,  unless  one 
of  them  has  authority  to  receive  such  notice  for  the 
others. 

[Notice  in  Case  of  Bankrupt  or  Insolvent.] 
§  101.  Where  a  party  has  been  adjudged  a  bankrupt 
or  an  insolvent,  or  has  made  an  assignment  for  the 
benefit  of  his  creditors,  notice  may  be  given  either 
to  the  party  himself  or  to  his  trustee  or  assignee. 

[Time  of  Giving  Notice  of  Dishonor.]  §  102.  No- 
tice may  be  given  as  soon  as  the  instrument  is  dis- 
honored, and  unless  delay  is  excused  as  hereinafter 


BILLS  AND  NOTES  131 

provided,  must  be  given  within  the  times  fixed  b} 
this  act. 

[Times  Required  for  Notice  Where  Persons  Giv- 
ing and  Receiving  Reside  in  Same  Place.]  §  103. 
Where  the  person  giving  and  the  person  to  receive 
notice  reside  in  same  place,  notice  must  be  given 
within  the  following  times : 

1.  If  given  at  the  place  of  business  of  the  person 
to  receive  notice,  it  must  be  given  before  the  close 
of  business  hours  on  the  day  following. 

2.  If  given  at  his  residence,  it  must  be  given 
before  the  usual  hours  of  rest  on  the  day  following. 

3.  If  sent  by  mail,  it  must  be  deposited  in  the 
postoffice  in  time  to  reach  him  in  the  usual  coiu'se  on 
the  day  following. 

[Times  for  Notice  Where  Persons  Giving  and 
Receiving  Reside  in  Different  Places.]  §  10-i.  Where 
the  person  giving  and  the  person  to  receive  notice 
reside  in  different  places,  the  notice  must  be  given 
within  the  following  times: 

1.  If  sent  by  mail,  it  must  be  deposited  in  the 
postoffice  in  time  to  go  by  mail  the  day  following  the 
day  of  dishonor,  or  if  there  be  no  mail  at  a  convenient 
hour  on  that  day,  by  the  next  mail  thereafter. 

2.  If  given  otherwise  than  through  the  post- 
office,  then  within  the  time  that  notice  would  have 
been  received  in  due  course  of  mail,  if  it  had  been 
deposited  in  the  postoffice  wdthin  the  time  specified 
in  the  last  subdivision. 

[Notice  Duly  Mailed  Deemed  Due  Notice  Not- 
withstanding Miscarriage.]  §  105.  Where  notice 
of  dishonor  is  duly  addressed  and  deposited  in  the 
postoffice,  the  sender  is  deemed  to  have  given  due 


128  COMMEECIAL  LAW 

notice,  notwithstanding  any  miscarriage  in  tlie  mails. 

[Deposit  in  Letter  Box  Same  as  Postoffice.]  §  106. 
Notice  is  deemed  to  have  been  deposited  in  the  post- 
office  when  deposited  in  any  branch  postoffice  or  in 
any  letter  box  under  the  control  of  the  postoffice  de- 
partment. 

[Party  Receiving  Notice  Has  Same  Time  for 
Notifying  Antecedent  Parties.]  §  107.  Where  a 
party  receives  notice  of  dishonor,  he  has,  after  the 
receipt  of  such  notice,  the  same  time  for  giving  no- 
tice to  antecedent  parties  that  the  holder  has  after 
dishonor. 

[Notice  Sent,  to  What  Address.]  §  108.  Where 
a  party  has  added  an  address  to  his  signature,  notice 
of  dishonor  must  be  sent  to  that  address;  but  if  he 
has  not  given  such  address,  then  the  notice  must  be 
sent  as  foUowsi 

1.  Either  to  the  postoffice  nearest  to  his  place 
of  residence,  or  to  the  postoffice  where  he  is  accus- 
tomed to  receive  his  letters;  or 

2.  If  he  lives  in  one  place,  and  has  his  place  of 
business  in  another,  notice  may  be  sent  to  either 
place;  or 

3.  If  he  is  sojourning  in  another  place,  notice 
may  be  sent  to  the  place  where  he  is  sojourning. 

But  where  the  notice  is  actually  received  by  the 
party  within  the  time  specified  in  this  act,  it  will  be 
sufficient,  though  not  sent  in  accordance  with  the 
requirements  of  this  section. 

[Notice  May  Be  Waived.]  §  109.  Notice  of  dis- 
honor may  be  waived,  either  before  the  time  of  giv- 
ing notice  has  arrived,  or  after  the  omission  to  give 


BILLS  AND  NOTES  123 

due  notice,  and  the  waiver  may  be  express  or  im- 
plied. 

[Waiver  Embodied  in  Instrument  Binding  on  All 
Parties.]  §  110.  Where  the  waiver  is  embodied  in 
the  instrument  itself,  it  is  binding  upon  all  parties; 
but  where  it  is  written  above  the  signature  of  an  in- 
dorser,  it  binds  him  only. 

[Waiver  of  Protest  Waives  Presentment  and 
Notice  of  Dishonor.]  §  111.  A  waiver  of  protest, 
whether  in  the  case  of  a  foreign  bill  of  exchange  or 
other  negotiable  instrument,  is  deemed  to  be  a  waiver 
not  only  of  a  formal  protest,  but  also  of  a  present- 
ment and  notice  of  dishonor. 

[Notice  of  Dishonor,  When  Dispensed  With.] 
§  112.  Notice  of  dishonor  is  dispensed  with  when, 
after  the  exercise  of  reasonable  diligence,  it  cannot 
be  given  to  or  does  not  reach  the  parties  sought  to  be 
charged. 

[Delay  in  Giving  Notice  of  Dishonor,  When  Ex- 
cused.] §  113.  Delay  in  giving  notice  of  dishonor 
is  excused  when  the  delay  is  caused  by  circumstances 
beyond  the  control  of  the  holder  and  not  imputable 
to  his  default,  misconduct  or  negligence.  When  the 
cause  of  delay  ceases  to  operate,  notice  must  be  given 
with  reasonable  diligence. 

[Notice  of  Dishonor,  When  Not  Required  to 
Drawer.]  §  114.  Notice  of  dishonor  is  not  required 
to  be  given  to  the  drawer  in  either  of  the  following 
cases : 

1.  Where  the  drawer  and  drawee  are  the  same 
person. 

2.  Where  the  drawee  is  a  fictitious  person  or 
a  person  not  having  capacity  to  contract. 


134  COMMERCIAL  LAW 

3.  Where  the  drawer  is  a  xDerson  to  whom  the 
instrument  is  presented  for  pa\iTient. 

4.  Where  the  di'awer  has  no  right  to  expect  or 
require  that  the  drawee  or  acceptor  will  honor  the 
instrument. 

5.  Where  the  drawer  has  countermanded  pay- 
ment. 

[Notice  of  Dishonor,  When  Not  Required  to  In- 
dorser.]  §  115.  Notice  of  dishonor  is  not  required 
to  be  given  to  an  indorser  in  either  of  the  following 
cases : 

1.  Where  the  drawee  is  a  fictitious  person  or  a 
person  not  having  capacity  to  contract  and  the  in- 
dorser was  aware  of  the  fact  at  the  time  he  indorsed 
the  instrument. 

2.  Where  the  indorser  is  the  person  to  whom 
the  instrument  is  presented  for  payment. 

3.  Where  the  instrument  was  made  or  accepted 
for  his  accommodation. 

[Notice  of  Non-acceptance  Annuls  Necessity  for 
Notice  of  Subsequent  Non-payment.]  §  116.  Where 
due  notice  of  dishonor  by  non-acceptance  has  been 
given,  notice  of  a  subsequent  dishonor  by  non-pay- 
ment is  not  necessary,  unless  in  the  meantime  the 
instrument  has  been  accepted. 

[Omission  of  Notice  for  Non-acceptance  Not  to 
Prejudice  Holder  in  Due  Course  Subsequently.] 
§  117.  An  omission  to  give  notice  of  dishonor  by 
non-acceptance  does  not  prejudice  the  rights  of  a 
holder  in  due  course  subsequent  to  the  omission. 

[Protest  Required  Only  in  Foreign  Bills.] 
§  118.  Where  any  negotiable  instrument  has  been 
dishonored  it  may  be  protested  for  non-acceptance 


BILLS  AND  NOTES  135 

or  non-payment  as  the  case  may  be;  but  protest  is 
not  required,  except  in  the  case  of  foreign  bills  of 
exchange. 

Article  VIII.— Discharge  of  Negotiable  Instruments. 

[How  Discharged.]  §  119.  A  negotiable  instru- 
ment is  discharged: 

1.  By  payment  in  due  course  by  or  on  behalf  of 
the  principal  debtor. 

2.  By  payment  in  due  course  by  the  party  ac- 
commodated, where  the  instrument  is  made  or 
accepted  for  accommodation. 

3.  By  the  intentional  cancellation  thereof  by 
the  holder. 

4.  By  any  other  act  which  will  discharge  a  sim- 
ple contract  for  the  payment  of  money. 

[How  Secondary  Liability  Discharged.]  §  120. 
A  person  secondarily  liable  on  the  instrument  is 
discharged: 

1.  By  an  act  which  discharges  the  instrument. 

2.  By  the  intentional  cancellation  of  his  signa- 
ture by  the  holder. 

3.  By  the  discharge  of  a  prior  party. 

4.  By  a  release  of  the  principal  debtor,  unless 
the  holder's  right  of  recourse  against  the  part 
(party)  secondarily  liable  is  exi)ressly  reserved,  or 
unless  the  principal  debtor  be  an  accommodating 
party. 

5.  By  a  release  of  the  principal  debtor,  unless 
the  holder's  right  of  recourse  against  the  party  sec- 
ondarily liable  is  expressly  reserved. 

6.  By  any  agreement  binding  upon  the  holder 
to  extend  the  time  of  pajTuent,  or  to  postpone  the 


126  COMMERCIAL  LAW 

holder  ^s  right  to  enforce  the  instrument,  unless  made 
with  the  assent  of  the  party  secondarily  liable,  or 
unless  the  right  of  recourse  against  such  party  is 
expressly  reserved. 

[Rights  of  Party  Secondarily  Liable,  on  Pay- 
ing.] §  121.  Where  the  instriunent  is  paid  by  a 
party  secondarily  liable  thereon,  it  is  not  discharged; 
but  the  party  so  paying  it  is  remitted  to  his  former 
rights  as  regards  all  prior  parties,  and  he  may  strike 
out  his  own  and  all  subsequent  indorsements,  and 
again  negotiate  the  instrument,  except : 

1.  Where  it  is  payable  to  the  order  of  a  third 
person  and  has  been  paid  by  the  drawer;  and 

2.  Where  it  was  made  or  accepted  for  accom- 
modation, and  has  been  paid  by  the  party  accom- 
modated. 

[Holder  May  Expressly  Renounce  His  Rights 
Against  Any  Party  to  the  Paper.]  §  122.  The 
holder  may  expressly  renounce  his  rights  against 
any  party  to  the  instrmnent  before,  at,  or  after  its 
maturity.  An  absolute  and  unconditional  renuncia- 
tion of  his  rights  against  the  principal  debtor  at  or 
after  the  maturity  of  the  instrument,  discharges  the 
instrument.  But  a  renunciation  does  not  affect  the 
rights  of  a  holder  in  due  course  without  notice.  A 
renunciation  must  be  in  writing,  unless  the  instru- 
ment is  delivered  up  to  the  person  primarily  liable 
thereon. 

[Unintentional  Cancellation  Inoperative — Bur- 
den of  Proof.]  §  123.  A  cancellation  made  unin- 
tentionally, or  under  a  mistake,  or  without  the  au- 
thority of  the  holder,  is  inoperative;  but  where  an 
instrument  or  any  signature  thereon  appears  to  have 


BILLS  AND  NOTES  127 

been  cancelled,  the  burden  of  proof  lies  on  the  party 
who  alleges  that  the  cancellation  was  made  uninten- 
tionally, or  under  a  mistake  or  without  authority. 

[Material  or  Fraudulent  Alteration  of  Instru- 
ment.] §  124.  Where  a  negotiable  instrimient  is 
fraudulently  or  materially  altered  by  the  holder 
without  the  assent  of  all  the  parties  liable  thereon, 
it  is  avoided  except  as  against  a  party  who  has  him- 
self made,  authorized  or  assented  to  the  alteration 
and  subsequent  indorsers. 

But  when  an  instrument  has  been  materially 
altered  and  is  in  the  hands  of  a  holder  in  due  course, 
not  a  party  to  the  alteration,  he  may  enforce  payment 
thereof  according  to  its  original  tenor. 

[What  Are  Material  Alterations.]  §  125.  Any 
alteration  which  changes: 

1.  The  date. 

2.  The  sum  payable,  either  for  principal  or 
interest. 

3.  The  time  or  place  of  payment. 

4.  The  number  and  the  relations  of  the  parties. 

5.  The  medium  or  currency  in  which  payment 
Ib  to  be  made. 

Or  which  adds  a  place  of  payment  where  no  place 
of  payment  is  specified,  or  any  other  change  or  addi- 
tion which  alters  the  effect  of  the  instrument  in  any 
respect,  is  a  material  alteration. 

TITLE  n.— BILLS  OF  EXCHANGE. 
Article  I. — Form  and  Interpretation. 

[Bill  of  Exchange  Defined.]  §  126.  A  bill  of 
exchange  is  an  unconditional  order  in  writing  ad- 


128  COMMEKCIAL  LAW 

di-essed  by  one  person  to  another,  signed  by  the  per- 
son giving  it,  requiring  the  person  to  whom  it  is 
addressed  to  pay  on  demand,  or  at  a  fixed  or  deter- 
minable future  time,  a  sum  certain  in  money  to  order 
or  to  bearer. 

[No  Assignment  of  Funds  Until  Acceptance.] 
§  127.  A  bill  of  itself  does  not  operate  as  an  assign- 
ment of  the  funds  in  the  hands  of  the  drawee  avail- 
able for  the  payment  thereof,  and  the  drawee  is  not 
liable  on  the  bill  unless  and  until  he  accepts  the 
same. 

[May  Be  Addressed  to  Several  Drawees  Jointly, 
But  Not  in  the  Alternative.]  §  128.  A  bill  may  be 
addressed  to  two  or  more  drawees  jointly,  whether 
they  are  partners  or  not;  but  not  to  two  or  more 
drawees  in  the  alternative  or  in  succession. 

[Inland  and  Foreign  Bills.]  §  129.  An  inland 
bill  of  exchange  is  a  bill  which  is,  or  on  its  face  pur- 
ports to  be,  both  drawn  and  payable  within  this  state. 
Any  other  bill  is  a  foreign  bill.  Unless  the  contrary 
appears  on  the  face  of  the  bill,  the  holder  may  treat 
it  as  an  inland  bill. 

[May  Be  Treated  at  Option  as  a  Bill  or  Note.] 
§  130.  Where  in  a  biU  drawer  and  drawee  are  the 
same  person,  or  where  the  drawee  is  a  fictitious  per- 
son, or  a  person  not  ha\iiig  capacity  to  contract,  the 
holder  may  treat  the  instrument  at  his  option,  either 
as  a  bill  of  exchange  or  a  promissory  note. 

[Referee  in  Case  of  Need.]  §  131.  The  drawer 
of  a  bill  and  any  indorser  may  insert  thereon  the 
name  of  a  person  to  whom  the  holder  may  resort 
in  case  of  need,  that  is  to  say,  in  case  the  bill  is  dis- 
honored by  non-acceptance  or  non-payment.    Such 


BILLS  AND  NOTES  129 

person  is  called  the  referee  in  case  of  need.  It  is  the 
option  of  the  holder  to  resort  to  the  referee  in  case 
of  need,  or  not,  as  he  may  see  fit. 

Article  II. — Acceptance. 

[Acceptance  Must  be  in  Writing  and  Uncondi- 
tional.] §  132.  The  acceptance  of  a  bill  is  the  sig- 
nification by  the  drawee  of  his  assent  to  the  order 
of  the  drawer.  The  acceptance  must  be  in  writing 
and  signed  by  the  drawee.  It  must  not  express  that 
the  di'awee  will  perform  his  promise  by  any  other 
means  than  the  payment  of  money. 

[Holder  May  Require  Acceptance  Written  on 
Bill.]  §  133.  The  holder  of  a  bill  presenting  the 
same  for  acceptance  may  require  that  the  acceptance 
be  written  on  the  bill,  and  if  such  request  is  refused 
may  treat  the  bill  as  dishonored. 

[Effect  of  Acceptance  on  Separate  Paper.] 
§  134.  Where  an  acceptance  is  written  on  a  paper 
other  than  the  bill  itself,  it  does  not  bind  the  ac- 
ceptor except  in  favor  of  a  person  who,  on  the  faith 
thereof,  receives  the  bill  for  value. 

[Effect  of  Promise  in  Writing  to  Accept  a  Bill.] 
§  135.  An  unconditional  promise  in  writing  to  ac- 
cept a  bill  before  or  after  it  is  drawn  is  deemed  an 
actual  acceptance  in  favor  of  every  person  who, 
upon  the  faith  thereof,  receives  the  bill  for  value. 

[Twenty-four  Hours  Allowed  for  Decision  as  to 
Acceptance.]  §  136.  The  drawee  is  allowed  twen- 
ty-four hours  after  presentment  in  which  to  decide 
whether  or  not  he  will  accept  the  bill;  but  the  accept- 
ance, if  given,  dates  as  the  day  of  presentment. 

[When  Bill  May  be  Accepted.]     §  137.    A  bill 


130  COMMEKCIAL  LAW 

may  be  accepted  before  it  has  been  signed  by  the 
drawer,  or  while  otherwise  incomplete,  or  when  it  is 
overdue,  or  after  it  has  been  dishonored  by  a  pre- 
vious refusal  to  accept,  or  by  non-payment. 

[Acceptance  After  Dishonor  Reinstates  Original 
Date.]  §  138.  But  when  a  bill  payable  after  sight 
is  dishonored  by  non-acceptance  and  the  drawee 
subsequently  accepts  it,  the  holder,  in  the  absence 
of  any  different  agreement,  is  entitled  to  have  the 
bill  payable  accepted  as  of  the  date  of  the  first 
presentment. 

[General  and  Qualified  Acceptance.]  §  139.  An 
acceptance  is  either  general  or  qualified.  A  general 
acceptance  assents  without  qualification  to  the  order 
of  the  drawer.  A  qualified  acceptance  in  express 
terms  varies  the  effect  of  the  bill  as  drawn. 

[Acceptance  to  Pay  at  Particular  Place.]  §  140. 
An  acceptance  to  pay  at  a  particular  place  is  a  gen- 
eral acceptance  unless  it  expressly  states  that  the 
bill  is  to  be  paid  there  only,  and  not  elsewhere. 

[Qualified  Acceptance  Characterized.]  §  141. 
An  acceptance  is  qualified  which  is : 

1.  Conditional;  that  is  to  say,  which  makes  pay- 
ment by  the  acceptor  dependent  on  the  fulfillment  of 
a  condition  therein  stated. 

2.  Partial;  that  is  to  say,  an  acceptance  to  pay 
part  only  of  the  amount  for  which  the  bill  is  drawn. 

3.  Local;  that  is  to  say,  an  acceptance  to  pay 
only  at  a  particular  time. 

4.  Qualified  as  to  time. 

5.  The  acceptance  of  some  one  or  more  of  the 
drawees,  but  not  of  all. 

[Qualified  Acceptance  May  be  Refused — Effect  if 


BILLS  AND  NOTES  131 

Taken.]  §  142.  The  holder  may  refuse  to  take  a 
qualified  acceptance,  and  if  he  does  not  obtain  an 
unqualified  acceptance,  he  may  treat  the  bill  as  dis- 
honored by  non-acceptance.  Where  a  qualified  ac- 
ceptance is  taken,  the  di'awer  and  indorsers  are  dis- 
charged from  liability  on  the  bill,  unless  they  have 
expressly  or  impliedly  authorized  the  holder  to 
take  a  qualified  acceptance,  or  subsequently  assent 
thereto.  When  the  drawer  or  indorser  receives  no- 
tice of  a  qualified  acceptance,  he  must  within  a  rea- 
sonable time  express  his  dissent  to  the  holder,  or  he 
will  be  deemed  to  have  assented  thereto. 

Article  III. — Presentment  for  Acceptance. 

[When  Presentment  Required.]  §  143.  Pre- 
sentment for  acceptance  must  be  made: 

1.  Where  the  bill  is  payable  after  sight,  or  in 
any  other  case  where  presentment  for  acceptance  is 
necessary  in  order  to  fix  the  maturity  of  the  instru- 
ment; or 

2.  Where  the  bill  expressly  stipulates  that  it 
shall  be  presented  for  acceptance;  or 

3.  Where  the  bill  is  drawn  payable  elsewhere 
than  at  the  residence  or  place  of  business  of  the 
drawee. 

In  no  other  case  is  presentment  for  acceptance 
necessary  in  order  to  render  any  party  to  the  bill 
liable. 

[Must  be  Presented  or  Negotiated  Within  Rea- 
sonable Time.]  §  144.  Except  as  herein  otherwise 
provided,  the  holder  of  a  bill  which  is  required  by 
the  next  preceding  section  to  be  presented  for  ac- 
ceptance must  either  present  it  for  acceptance  or 


132  COMMERCIAL  LAW 

negotiate  it  within  a  reasonable  time.  If  he  fails  to 
do  so,  the  drawer  and  all  indorsers  are  discharged. 
[\Vhen,  How  and  Upon  Whom  Presentment  for 
Acceptance  to  be  Made.]  §  145.  Presentment  for 
acceptance  must  be  made  by  or  on  behalf  of  the 
holder  at  a  reasonable  hour,  on  a  business  day,  and 
before  the  bill  is  overdue,  to  the  drawee  or  some  per- 
son authorized  to  accept  or  refuse  acceptance  on  his 
behalf;  and: 

1.  Where  a  bill  is  addressed  to  two  or  more 
drawees  who  are  not  partners,  presentment  must  be 
made  to  them  all,  unless  one  has  authority  to  accept 
or  refuse  acceptance  for  all,  in  which  case  present- 
ment may  be  made  to  him  only. 

2.  Wliere  the  drawee  is  dead,  presentment  may 
be  made  to  his  personal  representative. 

3.  Where  the  drawee  has  been  adjudged  a  bank- 
rupt or  an  insolvent,  or  has  made  an  assignment  for 
the  benefit  of  creditors,  presentment  may  be  made 
to  him  or  to  his  trustee  or  assignee. 

[When  Presentment  to  be  Made.]  §  146.  A  bill 
may  be  presented  for  acceptance  on  any  day  on  which 
negotiable  instruments  msLj  be  presented  for  pay- 
ment under  the  provisions  of  sections  seventy-two 
and  eighty-five  of  this  act.  When  Saturday  is  not 
otherwise  a  holiday,  presentment  for  acceptance 
may  be  made  before  twelve  o'clock  noon  on  that  day. 

[When  Delay  is  Excused.]  §  147.  Where  the 
holder  of  a  bill  drawn  payable  elsewhere  than  at  the 
place  of  business  or  residence  of  the  drawee  has  not 
time,  with  the  exercise  of  reasonable  diligence,  to 
present  the  bill  for  acceptance  before  presenting  it 
for  payment  on  the  day  that  it  falls  due,  the  delay 


BILLS  AND  NOTES  133 

caused  by  presenting  the  bill  for  acceptance  before 
presenting  it  for  payment  is  excused  and  does  not 
discharge  the  drawers  and  indorsers. 

[When  Presentment  is  Excused.]  §  148.  Pre- 
sentment for  acceptance  is  excused  and  a  bill  may  be 
treated  as  dishonored  by  non-acceptance  in  either  of 
the  following  cases : 

1.  Where  the  drawee  is  dead,  or  has  absconded, 
or  is  a  fictitious  person  or  a  person  not  having  capa- 
city to  contract  by  bill. 

2.  Where,  after  the  exercise  of  reasonable  dili- 
gence, presentment  cannot  be  made. 

3.  Where,  although  presentment  has  been  ir- 
regular, acceptance  has  been  refused  on  some 
ground. 

[When  a  Bill  is  Dishonored  by  Non-acceptance.] 
§  149.     A  bill  is  dishonored  by  non-acceptance : 

1.  When  it  is  duly  presented  for  acceptance  and 
such  an  acceptance  as  is  prescribed  by  this  act  is 
refused  or  cannot  be  obtained;  or 

2.  Wlien  a  presentment  for  acceptance  is  ex- 
cused and  the  bill  is  not  accepted. 

[Dilatory  Presentment  Renders  Bill  Dishonored 
for  Non-acceptance.]  §  150.  Where  a  bill  is  duly 
presented  for  acceptance  and  is  not  presented  within 
the  prescribed  time,  the  person  presenting  it  must 
treat  the  bill  as  dishonored  by  non-acceptance,  or  he 
loses  the  right  of  recourse  against  the  drawer  and 
indorsers. 

[Dishonor  by  Non-acceptance  Renders  Present- 
ment for  Payment  Unnecessary.]  §  151.  When  a 
bill  is  dishonored  by  non-acceptance,  an  immediate 
right  of  recourse  against  the  drawers  and  indorsers 


134  COMMERCIAL  LAW 

accrues  to  the  holders,  and  no  presentment  for  pay- 
ment is  necessary. 

Article  IV. — Protest. 

[Protest  of  Foreign  Bill.]  §  152.  Where  a  for- 
eign bill  appearing  on  its  face  to  be  such  is  dishon- 
ored by  non-acceptance,  it  must  be  duly  protested 
for  non-acceptance,  and  where  such  a  bill  which  has 
not  previously  been  dishonored  by  non-acceptance  is 
dishonored  by  non-paj'meut,  it  must  be  duly  pro- 
tested for  non-payment.  If  it  is  not  so  protested, 
the  draw^er  and  indorsers  are  discharged.  Where  a 
bill  does  not  appear  on  its  face  to  be  a  foreign  bill, 
protest  thereof,  in  case  of  dishonor,  is  unncessary. 

[Specifications  of  Protest.]  §  153.  The  protest 
must  be  annexed  to  the  bill  or  must  contain  a  copy 
thereof,  and  must  be  under  the  hand  and  seal  of  the 
notary  making  it  and  must  specify: 

1.  The  time  and  place  of  presentment. 

2.  The  fact  that  presentment  was  made  and  the 
manner  thereof. 

3.  The  cause  of  reason  for  protesting  the  bill. 

4.  The  demand  made  and  the  answer  given,  if 
any,  of  the  fact  that  the  drawee  or  acceptor  could 
not  be  found. 

[By  AVhom  Protest  Made.]  §  154.  Protest  may 
be  made :  by 

1.  A  notary  public;  or 

2.  By  any  respectable  resident  of  the  place 
where  the  bill  is  dishonored,  in  the  presence  of  two 
or  more  credible  witnesses. 

[Wlien  Protest  to  be  Made.]  §  155.  Wlien  a 
bill  is  protested,  such  protest  must  be  made  on  the 


BILLS  AND  NOTES  135 

day  of  its  dishonor,  unless  delay  is  excused  as  herein 
provided.  When  a  bill  has  been  duly  noted,  the  pro- 
test may  be  subsequently  extended  as  of  the  date  of 
the  noting. 

[Where  Protest  to  be  Made.]  §156.  A  bill  must 
be  protested  at  the  place  where  it  is  dishonored,  ex- 
cept that  when  a  bill  drawn  payable  at  the  place  of 
business  or  residence  of  some  person  other  than  the 
drawee,  has  been  dishonored  by  non-acceptance,  it 
must  be  protested  for  non-payment  at  the  place 
where  it  is  expressed  to  be  payable ;  and  no  other  pre- 
sentment for  pajTnent  to,  or  demand  on,  the  drawee 
is  necessary. 

[Subsequent  Protest  for  Non-Payment  May  be 
Made.]  §  157.  A  bill  which  has  been  protested  for 
non-acceptance  may  be  subsequently  protested  for 
non-payment. 

[Protest  May  be  Had  in  Cases  of  Bankrupts  or 
Insolvents.]  §  158.  When  the  acceptor  has  been 
adjudged  a  bankrupt  or  an  insolvent  or  has  made  an 
assignment  for  the  benefit  of  creditors,  before  the 
bill  matures,  the  holder  may  cause  the  bill  to  be  pro- 
tested for  better  security  against  the  drawer  and 
indorsers. 

[When  Protest  May  be  Dispensed  With  or  De- 
lay Excused.]  §  159.  Protest  is  dispensed  with  by 
any  circmnstances  which  would  dispense  with  notice 
of  dishonor.  Delay  in  noting  or  protesting  is  ex- 
cused when  delay  is  caused  by  circumstances  beyond 
the  control  of  the  holder  and  not  imputable  to  his 
default,  misconduct  or  negligence.  When  the  cause 
of  delay  ceases  to  operate,  the  bill  must  be  noted  or 
protested  with  reasonable  diligence. 


136  COMMERCIAL  LAW 

[Protest  on  Copy  of  Lost  BiU.]  §  160.  Where  a 
bill  is  lost  or  destroyed  or  is  wrongly  detained  from 
the  person  entitled  to  hold  it,  protest  may  be  made 
on  a  copy  or  written  particulars  thereof. 

Article  V. — ^Acceptance  for  Honor. 

[Acceptance  by  Third  Party  for  Honor.]  §  161. 
Where  a  bill  of  exchange  has  been  protested  for  dis- 
honor by  non-acceptance,  or  protested  for  better  se- 
curity, and  is  not  overdue,  any  person  not  being  a 
party  already  liable  thereon,  may,  with  the  consent 
of  the  holder,  intervene  and  accept  the  bill  supra 
protest  for  the  honor  of  any  party  liable  thereon  or 
for  the  honor  of  the  person  for  whose  account  the 
bill  is  drawn.  The  acceptance  for  honor  may  be  for 
part  only  of  the  sum  for  which  the  bill  is  drawn,  and 
where  there  has  been  an  acceptance  for  honor  for 
one  party  there  may  be  a  further  acceptance  by  a 
different  person  for  the  honor  of  another  party. 

[Acceptance  for  Honor  Must  be  in  Writing.] 
§  162.  An  acceptance  for  honor  supra  protest  must 
be  in  writing  and  indicate  that  it  is  an  acceptance 
for  honor,  and  must  be  signed  by  the  acceptor  for 
honor. 

[Deemed  for  Honor  of  Drawer  When  Not  Ex- 
pressed.] §  163.  Where  an  acceptance  for  honor 
does  not  expressly  state  for  whose  honor  it  was  made, 
it  is  deemed  to  be  an  acceptance  for  the  honor  of  the 
drawer. 

[To  Whom  Acceptor  for  Honor  Liable.]  §  164. 
The  acceptor  for  honor  is  liable  to  the  holder  and  to 
all  parties  to  the  bill  subsequent  to  the  party  for 
whose  honor  he  has  accepted. 


BILLS  AN'D  NOTES  137 

[Engagements  of  Acceptor  for  Honor.]  §  165. 
The  acceptor  for  honor  by  such  acceptance  engages 
that  he  will,  on  due  presentment,  pay  the  bill  accord- 
ing to  the  terms  of  his  acceptance,  provided  it  shall 
not  have  been  paid  by  the  drawee,  and  provided  also 
that  it  shall  have  been  duly  presented  for  payment 
and  protested  for  non-payment  and  notice  of  dis- 
honor given  to  him. 

[Acceptance  for  Honor  Dates  From  Non-accept- 
ance.] §  166.  When  a  bill  payable  after  sight  is 
accepted  for  honor,  its  maturity  is  calculated  from 
the  date  of  the  noting  for  non-acceptance  and  not 
from  the  date  of  the  acceptance  for  honor. 

[Bill  Accepted  for  Honor  Must  be  Protested  for 
Non-payment,  etc.]  §  167.  Where  a  dishonored  bill 
has  been  accepted  for  honor  supra  protest  or  contains 
a  reference  in  case  of  need,  it  must  be  protested  for 
non-payment  before  it  is  presented  for  payment  to 
the  acceptor  for  honor  or  referee  in  case  of  need. 

[Presentment  for  PajTuent  to  Acceptor  for 
Honor,  How  Made.]  §  168.  Presentment  for  pay- 
ment to  the  acceptor  for  honor  must  be  made  as 
follows : 

1.  If  it  is  to  be  presented  in  the  place  where  the 
protest  for  non-payment  was  made,  it  must  be  pre- 
sented not  later  than  the  day  following  its  maturity. 

2.  If  it  is  to  be  presented  in  some  other  place 
than  the  place  where  it  was  protested,  then  it  must 
be  forwarded  within  the  time  specified  in  section 
103. 

[Delay  in  Making  Presentment  to  Acceptor  for 
Honor.]    §  169.    The  provisions  of  section  81  apply 


138  COMMEKCIAL  LAW 

where  there  is  delay  in  making  presentment  to  the 
acceptor  for  honor  or  referee  in  case  of  need. 

[Protest  for  Non-payment  by  Acceptor  for 
Honor.]  §  170.  When  the  bill  is  dishonored  by  the 
acceptor  for  honor  it  must  be  protested  for  non- 
payment by  him. 

Article  VI. — Payment  for  Honor. 

[Any  Person  May  Pay  Supra  Protest  for  Honor.] 
§  171.  Where  a  bill  has  been  accepted  for  non-pay- 
ment, any  person  may  intervene  and  pay  it  supra 
protest  for  the  honor  of  any  person  liable  thereon  or 
for  the  honor  of  the  person  for  whose  account  it  was 
drawn. 

[Must  be  Attested  by  Notarial  Act  of  Honor.] 
§  172.  The  payment  for  honor  supra  protest  in  order 
to  operate  as  such  and  not  as  a  mere  voluntary  pay- 
ment must  be  attested  by  a  notarial  act  of  honor 
which  may  be  appended  to  the  protest  or  form  an 
extension  to  it. 

[Payer  Must  Declare  Intention,  and  for  Whose 
Honor.]  §  173.  The  notarial  act  of  honor  must  be 
founded  on  a  declaration  made  by  the  payer  for 
honor  or  by  his  agent  in  that  behalf  declaring  his 
intention  to  pay  the  bill  for  honor  and  for  whose 
honor  he  pays. 

[Preference  Among  Persons  Offering  to  Pay  for 
Honor.]  §  174.  Where  two  or  more  persons  offer 
to  pay  a  bill  for  the  honor  of  different  parties,  the 
person  whose  payment  will  discharge  most  parties 
to  the  bill  is  to  be  given  the  preference. 

[Discharge  of  Parties  Subsequent  to  Party  for 
Whose  Honor  Paid.]    §  175.    Where  a  bill  has  been 


BILLS  AND  NOTES  139 

paid  for  honor,  all  parties  subsequent  to  the  party 
for  whose  honor  it  is  paid  are  discharged,  but  the 
payer  for  honor  is  subrogated  for,  and  succeeds  to, 
both  the  rights  and  duties  of  the  holder  as  regards 
the  party  for  whose  honor  he  pays  and  all  parties 
liable  to  the  latter. 

[Effect  of  Holder  Refusing  to  Receive  Pajnnent 
Supra  Protest.]  §  176.  Where  the  holder  of  a  bill 
refuses  to  receive  payment  supra  protest,  he  loses  his 
right  of  recourse  against  any  party  who  would  have 
been  discharged  by  such  payment. 

[Payer  for  Honor  Entitled  to  Receive  Bill  and 
Protest.]  §  177.  The  payer  for  honor,  on  paying  to 
the  holder  the  amount  of  the  bill  and  the  notarial  ex- 
penses incidental  to  its  dishonor,  is  entitled  to  receive 
both  the  bill  itself  and  the  protest. 

Article  VII.— Bills  in  a  Set. 

[The  Whole  of  the  Parts  of  a  Bill  Drawn  in  a  Set 
Constitute  One  Bill.]  §  178.  Where  a  bill  is  drawn 
in  a  set,  each  part  of  the  set  being  numbered  and  con- 
taining a  reference  to  other  parts,  the  whole  of  the 
parts  constitute  one  bill. 

[Parts  of  Set  Negotiated  to  Different  Holders — 
True  Owner.]  §  179.  Where  two  or  more  parts  of  a 
set  are  negotiated  to  different  holdei's  in  due  course, 
the  holder  whose  title  first  accrues  is,  as  between 
such  holders,  the  true  owner  of  the  bill.  But  nothing 
in  this  section  affects  the  rights  of  a  person  who  in 
due  course  accepts  or  pays  the  part  fii'st  presented  to 
him. 


140  COMMERCIAL  LAW 

[Holder  Indorsing  More  Than  One  Part  Liable 
on  All  Such.]  §  180.  Where  the  holder  of  a  set  in- 
dorses two  or  more  parts  to  different  persons  he  is 
liable  on  every  such  part,  and  every  indorser  subse- 
quent to  him  is  liable  on  the  part  he  has  himself 
indorsed,  as  if  such  parts  were  separate  bills. 

[Acceptance  on  More  Than  One  Part.]  §  181. 
The  acceptance  may  be  written  on  am^  part  and  it 
must  be  written  on  one  part  only.  If  the  drawee 
accepts  more  than  one  part,  and  such  accepted  parts 
are  negotiated  to  different  holders  in  due  course,  he 
is  liable  on  every  such  part  as  if  it  were  a  separate 
bill. 

[Acceptor  Liable  on  Outstanding  Part  Accepted 
by  Him.]  §  182.  When  the  acceptor  of  a  bill  drawn 
in  a  set  pays  it  without  requiring  the  part  bearing  his 
acceptance  to  be  delivered  up  to  him,  and  that  part  at 
maturity  is  outstanding  in  the  hands  of  a  holder  in 
due  course,  he  is  liable  to  the  holder  thereon. 

[Payment  of  One  Part  Discharges  All.]  §  183. 
Except  as  herein  otherwise  provided,  where  any  one 
part  of  a  bill  drawn  in  a  set  is  discharged  by  pajonent 
or  otherwise,  the  whole  bill  is  discharged. 

TITLE  ni.— PROMISSORY  NOTES  AND 
CHECKS. 

Article  I. 

[What  is  a  Negotiable  Promissory  Note.]  §  184. 
A  negotiable  promissory  note  within  the  meaning  of 
this  act  is  an  unconditional  promise  in  writing  made 
by  one  person  to  another,  signed  by  the  maker,  en- 


BILLS  AND  NOTES  141 

gaging  to  pay  on  demand  or  at  a  fixed  or  determin- 
able future  time,  a  sum  certain  in  money  to  order  or 
to  bearer.  Wbere  a  note  is  drawn  to  the  maker's 
own  order,  it  is  not  complete  until  indorsed  b}^  him. 
[What  is  a  Check.]  §  185.  A  check  is  a  bill  of 
exchange  drawn  on  a  bank  payable  on  demand.  Ex- 
cept as  herein  otherwise  provided,  the  provisions  of 
this  act  are  applicable  to  a  bill  of  exchange  payable 
on  demand  apply  to  a  check.* 

Note. — As  per  copy. 

[Requisite  Action  on  Checks,  Presentment  No- 
tice, etc.]  §  186.  A  check  must  be  presented  for 
payment  within  a  reasonable  time  after  its  issue,  and 
notice  of  dishonor  given  to  the  drawer  as  provided 
for  in  the  case  of  bills  of  exchange,  or  the  drawer  will 
be  discharged  from  liability  thereon  to  the  extent  of 
the  loss  caused  by  the  delay. 

[Certification  Equivalent  to  Acceptance.]  §  187. 
Where  a  check  is  certified  by  the  bank  on  which 
it  is  drawn,  the  certification  is  equivalent  to  an 
acceptance. 

[Certification  Discharges  All  Drawers  and  In- 
dorsers.]  §  188.  Where  the  holder  of  a  check  pro- 
cures it  to  be  accepted  or  certified,  the  drawer  and 
all  indorsers  are  discharged  from  liability  thereon. 

[Check  Does  Not  Operate  as  Assignment  of  Fund 
Until  Acceptance.]  §  189.  A  check  of  itself  does  not 
operate  as  an  assignment  of  any  part  of  the  funds 
to  the  credit  of  the  drawer  with  the  bank,  and  the 
bank  is  not  liable  to  the  holder,  unless  and  imtil  it 
accepts  or  certifies  the  check. 


U2  COMMERCIAL  LAW 

TITLE  IV.— GENERAL  PROVISIONS. 
Article  I. 

[Title  of  Act.]  §  190.  This  act  shaU  be  known 
as  the  Negotiable  Instrument  Law. 

[Meaning  of  Words  Used  in  Act.]  §  191.  In 
this  act,  unless  the  context  otherwise  requires: 

"Acceptance"  means  an  acceptance  completed  by 
deliver}^  or  notification. 

"Action"  includes  counter-claim  and  set-off. 

"Bank"  includes  any  person  or  association  of 
persons  carrying  on  the  business  of  banking,  whether 
incorporated  or  not. 

"Bearer"  means  the  person  in  possession  of  a  bill 
or  note  which  is  payable  to  bearer. 

"Bill"  means  bill  of  exchange,  and  "note"  means 
negotiable  promissory  note. 

"Delivery"  means  transfer  of  possession,  actual 
or  constructive,  from  one  person  to  another. 

"Holder"  means  the  payee  or  indorsee  of  a  biU 
or  note,  who  is  in  possession  of  it,  or  the  bearer 
thereof. 

"Indorsement"  means  an  indorsement  completed 
by  delivery. 

"Instriunent"  means  negotiable  instrument. 

"Issue"  means  the  first  delivery  of  the  instru- 
ment, complete  in  form,  to  a  person  who  takes  it  as  a 
holder. 

"Person"  includes  a  body  of  persons,  whether 
incorporated  or  not. 

"Value"  means  valuable  consideration. 

"Written"  includes  printed,  and  "writing"  in- 
cludes print. 


BILLS  AND  NOTES  143 

[Person  Primarily  Liable.]  §  192.  The  person 
** primarily^'  liable  on  an  instrument  is  the  person 
who,  by  the  terms  of  the  instrmnent,  is  absolutely 
required  to  pay  the  same.  All  other  parties  are 
** secondarily'^  liable. 

[Reasonable  Time.]  §  193.  In  determining  what 
is  a  * 'reasonable  time"  or  an  ''unreasonable  time," 
regard  is  to  be  had  to  the  nature  of  the  instrument, 
the  usage  of  trade  or  business  (if  any)  with  respect 
to  such  instruments,  and  the  facts  of  the  particular 
case. 

[Time  Prescribed — Sundays  and  Holidays,  etc.] 
§  194.  Where  the  day,  or  the  last  day,  for  doing  an 
act  herein  required  or  permitted  to  be  done  falls  on 
Sunday  or  on  a  holiday,  the  act  may  be  done  on  the 
next  succeeding  secular  or  business  day. 

[Provisions  of  Act  Not  to  Apply  to  Previously 
Given  Instruments.]  §  195.  The  provisions  of  this 
act  do  not  apply  to  negotiable  instruments  made  and 
delivered  prior  to  the  passage  hereof. 

[Law  Merchant  to  Govern  Cases  Not  Provided  in 
This  Act.]  §  196,  In  any  case  not  provided  for  in 
this  act,  the  rules  of  the  law  merchant  shall  govern. 


CHAPTER  Vin. 

GUARANTY  AND  SURETYSHIP. 

Section  88.    Definitions  and  Distinctions. 

The  contracts  of  guaranty  and  suretyship  are  each 
a  branch  of  the  same  general  species  of  contracts. 
Both  the  guarantor  and  the  surety  by  their  contract 
make  themselves  secondarily  liable  for  the  payment 
of  the  debt  for  which  another  is  primarily  liable.  The 
most  numerous  instances  of  the  contract  of  guarantor 
and  surety  are  to  be  found  in  the  cases  of  promissory 
notes  and  bonds. 

In  spite  of  the  similarity  between  the  contract  of 
the  guarantor  and  the  surety,  some  marked  distinc- 
tions are  to  be  found  between  them. 

A  surety,  as  a  general  rule,  is  a  party  to  the  origi- 
nal contract  of  the  principal,  he  signs  his  name  to 
the  original  agreement  at  the  same  time  the  principal 
signs,  and  the  consideration  for  the  principal's  con- 
tract is  the  consideration  for  the  agreement  of  the 
surety's.  The  surety  is  therefore  bound  on  his  con- 
tract from  the  very  beginning,  and  he  is  bound  also 
to  inform  himself  of  the  defaults  of  the  principal 
debtor,  and  he  is  not  in  any  part  relieved  from  his 
obligations  under  the  contract  by  the  creditor's  fail- 
ure to  inform  him  of  the  principal's  default  in  the 
contract,  for  which  contract  the  surety  has  become 
the  security  for.    A  guarantor,  on  the  other  hand, 

10  1*5 


146  COMMERCIAL  LAW 

usually  does  not  make  his  agreement  to  answer  for 
the  principal's  debt  or  default,  contemporaneously 
with  the  principal  or  by  the  same  agreement,  but  his 
obligation  is  entered  into  subsequently  to  the  making 
of  the  original  agreement,  and  his  agreement  is  not 
the  contract  that  the  principal  makes,  and  hence  a 
new  consideration  is  required  to  support  it.  The 
contract  of  the  principal's  not  being  the  one  the 
guarantor  makes,  he  is  not  bound  to  inform  himself 
of  default,  or  failure  of  principal  to  perform  his 
contract. 

The  creditor  is  also  under  the  obligation  to  inform 
the  guarantor  of  the  principal's  default,  not  strictly 
in  the  sense  of  being  obliged  to  give  notice  imme- 
diately after  demand  on  the  day  the  obligation  ma- 
tures, as  in  the  case  of  an  indorser,  but  if  a  failure  to 
give  notice  materially  prejudices  the  rights  of  the 
guarantor,  the  guarantor  can  claim  a  discharge  on 
the  obligation  to  the  extent  of  the  injury  suffered. 
The  contract  of  the  guarantor  is  not  only  collateral, 
but  it  is  secondary;  the  surety's  contract  is  primary 
and  direct. 

The  guarantor  is  liable  only  after  the  default  of 
the  principal;  the  liability  is  established  by  the  de- 
fault of  the  principal,  and  by  showing  performance 
of  the  conditions  of  the  contract.^ 

Section  89.    Who  May  Become  Surety  or  a 
Guarantor. 

In  general,  any  person  who  is  capable  of  contract- 
ing, may  bind  himself  as  a  guarantor  or  a  surety. 
Some  exceptions,  however,  are  to  be  noted.    A  cor- 

*  S.  B-  Neltnor  in  Law  Libraiy. 


GUAEANTY  AND  SURETYSHIP  147 

poration  cannot  become  surety  unless  this  power  is 
given  them  in  their  charter;  by  statute  in  some  states 
an  attorney  at  law  is  prohibited  from  acting  as 
surety;  in  many  of  the  states,  which  have  given  mar- 
ried women  the  right  to  contract  in  other  respects, 
the  right  to  make  contracts  of  suretyship  is  still 
denied  to  them.  It  is  often  provided  in  partnership 
agreements  that  neither  partner  shall  become  a 
surety  or  a  guarantor  without  the  consent  of  all  the 
other  partners.  The  disabilities  to  contracting  in 
general,  such  as  infancy,  insanity,  etc.,  apply  in  case 
of  guaranty  and  suretyship. 

Section  90.  Making  the  Contract. 
The  contracts  of  guaranty  and  suretyship  require 
a  consideration  the  same  as  other  contracts,  but  it 
is  not  necessary  that  the  consideration  should  be  in 
any  sense  a  benefit  to  the  surety  or  guarantor.  The 
detriment  to  the  party  to  whom  the  promise  is  made 
is  a  sufficient  consideration  to  bind  the  guarantor 
and  surety. 

Section  91.    Liability  of  Guarantor  and  Surety. 

The  liability  of  the  guarantor  and  the  surety  has 
already  been  discussed  to  some  extent  in  section  88. 
As  a  general  rule,  the  liability  of  neither  can  be  ex- 
tended by  implication  beyond  the  precise  terms  of  the 
contract.  Delivery  also  is  essential,  to  make  the 
guarantor  or  surety  liable  either  on  a  note  or  bond. 
The  contract  of  the  surety  is  an  original  one.  If  the 
surety  binds  himself  to  the  same  extent  as  the  prin- 
cipal he  may  be  sued  before  the  principal  or  the  prin- 
cipal may  disregard  it  and  the  surety  only  be 
sued.     A    surety,    however,    is    not    liublo    beyond 


148  COMMEECIAL  LAW 

the  penalty  of  his  bond.  If  a  surety  signs  the  in- 
strument before  it  has  been  completely  filled  out,  and 
it  is  afterward  filled  out  and  delivered,  he  is  liable 
thereon,  even  although  the  blanks  were  filled  in  in  a 
different  manner  from  that  agreed  upon  between  the 
principal  and  the  surety. 

If  a  surety  signs  in  such  a  manner  as  to  appear  as 
a  principal  he  is  bound  as  a  principal,  although  it  was 
the  intention  that  he  should  be  merely  a  surety. 

As  between  the  immediate  parties  to  any  bill  or 
note,  any  defense  can  be  set  up  which  would  invali- 
date any  ordinary  contract.  This  rule  does  not  apply 
in  the  case  of  remote  parties. 

The  holder  of  a  bill  or  note,  to  take  it  free  from 
defenses,  must  have  given  something  of  value  for  it. 
This  rule  does  not  apply,  however,  when  the  prin- 
cipal is  released  by  operation  of  law.  A  surety  will 
be  released  by  any  material  alteration  of  the  contract 
between  the  principal  and  the  creditor.  For  ex- 
ample, an  extension  of  time  given  by  the  creditor  to 
the  principal,  without  the  siu-ety's  knowledge  and 
consent,  is  a  frequent  ground  for  claiming  a  dis- 
charge, both  because  of  the  alteration  of  the  contract 
and  because  the  risk  of  the  surety  is  thereby  in- 
creased. But  the  law  requires  the  extension  agree- 
ment to  be  founded  on  a  proper  consideration,  in 
order  that  it  work  a  release.  And  the  granting  of 
additional  time  could  not  be  held  to  discharge  the 
surety  where  the  surety  has  been  fully  indemnified 
against  loss  by  the  principal's  putting  him  in  posses- 
sion of  property  sufficient  to  pay  the  debt.  The 
holder  of  a  guaranteed  note  does  not  discharge  the 
guarantor  by  taking  collateral  security  of  the  maker 


GUARANTY  AND  SURETYSHIP  149 

without  extending  the  time.  Taking  additional  se- 
curity does  not  weaken  the  original  contract,  nor  take 
from  the  surety  any  advantage,  it  could  only  be  a 
benefit. 

A  surety  is  not  bound  who  was  induced  to  become 
a  surety  through  the  fraud  of  the  creditor. 

Section  92.    Liability  of  Guarantor. 

The  contract  of  the  guarantor  differs  from  that 
of  a  surety  in  that  it  is  a  secondary  instead  of  a  pri- 
mary contract.  In  other  words,  where  the  surety 
makes  a  contract  of  its  own  with  the  creditor  the 
guarantor  only  guarantees  the  contract  of  the  prin- 
cipal. Guarantees  may  be  either  special  or  general. 
A  special  guarantee  is  one  limited  to  the  guaranty  of 
the  obligation  of  another  to  some  particular  person, 
while  a  general  guarantee  is  one  not  so  limited. 

Guarantee  may  be  also  either  absolute  or  con- 
ditional. In  case  of  a  conditional  guarantee,  the 
guarantor  is  entitled  to  notice  of  default,  but  not  in 
the  case  of  an  absolute  guarantee. 

The  rights  of  the  guarantor  having  been  fixed,  he 
is  liable  to  the  extent  provided  for  by  his  contract. 

Section  93.    Eights  and  Remedies  of  Surety  and 
Guarantor. 

If  a  surety  or  guarantor  pay  the  debt  which  is 
primarily  the  debt  of  the  principal,  they  have  what 
is  known  as  the  rights  of  exoneration  and  subroga- 
tion. By  exoneration  is  meant  the  right  to  be  exoner- 
ated or  reimbursed  by  the  party  primarily  liable.  It 
is  a  simple  right  of  action  against  the  principal  for 
the  money  paid.    Subrogation  is  the  right  to  be  sub- 


150  COMMERCIAL  LAW 

rogated  to  or  put  into  place  of  the  creditor  towards 
the  principal  debtor.  In  other  words,  by  subroga- 
tion the  surety  or  guarantor  who  has  paid  the  debt 
becomes  entitled  to  sue  the  principal  debtor  and  in 
addition  is  entitled  to  the  benefit  of  all  the  securities 
which  the  principal  debtor  has  given  to  the  creditor. 
When  the  creditor  has  surrendered  to  the  principal, 
without  the  consent  of  the  surety,  any  securities 
given  to  him  by  the  principal  debtor,  the  surety  is 
entitled  to  a  set-off  if  he  is  sued  by  the  debtor.  If 
there  are  several  siu'eties,  and  one  surety  pays  the 
full  amount,  he  is  entitled  to  contribution  from  the 
other  sureties,  that  is,  he  can  compel  each  of  the  sui'e- 
ties  to  pay  his  proportionate  share  of  the  amount  for 
which  they  were  all  Uable. 

Section  94.    Bonds  and  Bail. 

A  bond  is  an  instrument  in  writing  and  under  seal, 
binding  the  obligers  to  the  obligee,  in  accordance  with 
the  recitals  of  the  terms  of  the  contract,  and  contain- 
ing a  defeasance  clause  showing  the  limitations  or 
conditions  of  the  liability  of  the  sureties. 

A  bond  is  sometimes  signed  both  by  the  principal 
and  surety  and  sometimes  only  by  the  surety.  Bonds 
are  of  many  kinds,  but  the  principles  governing  them 
are  in  the  main  the  same. 

The  most  important  class  of  bonds  are  those  for 
the  fulfilment  of  legal  obligations  of  any  character; 
bonds  given  in  legal  proceedings;  bonds  of  public 
officials  and  bail  bonds. 

A  bail  bond  is  one  given  to  secure  the  appearance 
of  the  person  who  is  released  from  custody  by  the 
filing  of  said  bail  bond  at  a  designated  time.    The 


GUAEANTY  AND  SURETYSHIP  151 

surety  is  released  from  obligation  in  said  case  if  the 
party  for  whom  the  bond  was  given  appears  for  trial 
at  the  proper  time  and  the  surety  may  also  release 
himself  by  siu-rendering  the  party,  for  whom  he  went 
bail,  once  more  into  custody. 


CHAPTER  IX. 

INSURANCE. 

Section  95.    Nature  of  the  Contract. 

One  most  striking  peculiarity  is  to  be  noticed,  at 
the  outset,  in  the  discussion  of  the  contract  of  insur- 
ance— which  is,  that  the  real  character  of  this  class 
of  contracts  is  the  exact  opposite  of  their  apparent 
character.  While  the  purpose  of  insurance  is,  to  as 
far  as  possible,  eliminate  the  uncertainties  of  acci- 
dental loss  by  the  division  of  such  loss  among  a 
large  number  of  those  exposed  to  the  danger  of  such 
loss,  the  contract  is  on  its  face  a  wagering  contract. 
The  explanation  of  this  apparent  inconsistency  lies 
in  the  fact  that  the  party  insured,  in  effect,  wagers 
he  will  suffer  a  certain  loss  (paying  a  small  sum  in 
all  events  upon  the  consideration  that  he  is  to  re- 
ceive a  large  sum  if  the  loss  occurs),  and  this  when 
the  loss  insured  against  happens,  the  winning  of  the 
wager,  i.  e.,  the  payment  of  the  insurance,  balances 
(or  partially  balances)  the  loss  sustained.  This 
wager  character  of  an  insurance  policy  is  partially 
hidden  in  the  case  of  a  life  insurance  policy  by  the 
presence  of  the  investment  element  in  the  contract, 
but  the  wager  element  is  present  just  as  certainly 
in  the  case  of  life  insurance  as  in  any  other  kind  of 
insurance.  In  life  insurance,  however,  the  loss  in- 
sured against  is  certain  to  happen,  and  the  element 

153 


154  COMMEECIAL  LAW 

of  uncertainty  arises  from  the  doubt  as  to  the  date  at 
which  such  loss  will  occur. 

Section  96.    The  Insurable  Interest. 

Formerly  any  person  could  take  out  a  policy  of 
insui-ance  upon  any  risk.  A  person  could  insui'e  the 
life  or  the  property  of  a  person  who  was  a  complete 
stranger  to  him  and  in  whose  life  or  property  he  had 
no  possible  interest.  Such  an  insiu-ance  policy  was 
a  clear  wagering  contract,  both  in  form  and  in  effect. 
WTien  wagering  contracts,  in  general,  were  declared 
by  statute  illegal,  this  class  of  insin-ance  contracts 
fell  under  the  ban,  and  it  is  now  necessary  for  the 
insured  to  have  some  interest  in  the  life  or  property 
insured.  In  the  case  of  a  life  insurance  contract, 
this  interest  must  have  existed  at  the  time  the  con- 
tract was  entered  into,  but  need  not,  necessarily, 
exist  at  the  time  of  the  death  of  the  party  on  whose 
life  the  policy  was  taken  out.  In  the  case  of  fire,  or 
marine  insurance,  on  the  other  hand,  the  insurable 
interest  need  not  exist  at  the  time  of  contracting, 
but  must  exist  at  the  time  of  loss.  In  insurance  con- 
tracts of  all  classes  the  amount  of  insurance  must  not 
exceed  the  insurable  interest.  Any  person,  however, 
may  insure  his  own  life  for  any  amount  he  sees  fit. 

Section  97.    The  Contract  of  Insurance. 

The  contract  of  insurance  presents  few  peculiari- 
ties. The  ordinary  rules  governing  the  making  of 
contracts,  the  necessity  of  a  consideration,  etc., 
apply  to  contracts  of  insurance.  Such  contracts  do 
not  fall  within  the  provisions   of  the   Statute  of 


INSURANCE  155 

lYauds  and  need  not  be  in  writing,  although,  as  a 
matter  of  fact,  such  contracts  invariably  are. 

Section  98.    Warranties  and  Representations. 

The  subject  of  warranties  and  representations  are 
of  particular  unportance  in  the  field  of  insurance. 
The  falsity  either  of  statements  contained  in  a  war- 
ranty or  a  representation  may  be  sufficient  to  avoid 
the  contract.  A  difference  between  the  two,  how- 
ever, is  to  be  noticed  in  the  fact  that  the  putting  of 
a  statement  in  the  form  of  a  warranty  is  conclusive 
evidebee  that  the  parties  consider  it  as  material, 
while  a  representation  may  or  may  not  be  material. 

Not  only  may  a  contract  of  insurance  be  avoided 
when  the  matter  contained  in  a  warranty  or  a  rep- 
resentation is  false,  but  also  when  future  promises 
contained  therein  are  violated. 

*' Statutes  providing  that  a  warranty,  misrepre- 
sentation, or  untrue  statement  in  a  contract  of  in- 
surance shall  not  be  a  ground  for  the  avoidance  of 
the  policy  unless  the  warranty,  misrepresentation,  or 
untrue  statement  relates  to  some  matter  material  to 
the  risk  have  been  applied  and  their  validity  tacitly 
assumed  in  numerous  reported  cases.  See  16  Am.  & 
Eng.  Encyc.  of  Law  (2nd  ed.)  921  et  seq.  Some 
presumption  of  validity,  of  course,  arises  from  the 
above-mentioned  decisions  applying  the  statutes  as 
valid  enactments,  but  in  a  number  of  cases  the  valid- 
ity of  such  statutes  has  been  directly  pa.^sed  upon. 
By  these  decisions  the  acts  have  been  uniformly 
sustained. 

The  purpose  of  such  statutes  is  to  prevent  tlie 
defeat  of  a  policy  by  a  mere  stringency  of  stipula- 


15«  COMMERCIAL  LAW 

tion,  since  by  the  aid  of  such  warranties,  and  the 
innocent  mistakes  of  the  insured,  it  has  often  hap- 
pened that  the  insurer  has  been  able  to  escape  lia- 
bility on  a  ground  having  no  real  merit  and  of  the 
purest  technicality.  Such  statutes  are  remedial  in 
their  natm^e,  and  are  quite  within  the  police  power 
of  the  legislature.  Penn.  Mut.  L.  Ins.  Co.  vs.  Me- 
chanics' Sav.  Bank  etc.  Co.  72  Fed.  Eep.  413,  19 
C.  C.  A.  286,  37  U.  S.  App.  692;  Schuermann  vs. 
Union  Cent.  L.  Ins.  Co.  165  Mo.  641,  65  S.  W.  Rep. 
723;  Continental  F.  Ins.  Co.  vs.  ^Yliitaker,  112  Tenn. 
151,  79  S.  W.  Rep.  119.  See  also  White  vs.  Connecti- 
cut Mut.  L.  Ins.  Co.  4  DiU  (U.  S.)  177,  29  Fed.  Cas. 
No.  17,545;  Queen  Ins.  Co.  vs.  Leslie,  47  Ohio  St.  409, 
24  N.  E.  Rep.  1072.    And  see  the  reported  case. 

The  validity  of  statutes  of  the  nature  under  dis- 
cussion may  also  be  sustained  on  the  ground  that  a 
state  has  a  right  to  prescribe  the  terms  and  con- 
ditions upon  which  it  grants  corporations,  whether 
foreign  or  domestic,  the  privilege  of  doing  business 
within  its  borders.  John  Hancock  Mut.  L.  Ins.  Co. 
vs.  Warren,  181  U.  S.  73,  21  U.  S.  Sup.  Ct.  Rep.  535, 
45  U.  S.  (L.  ed.)  755,  wherein  the  court  said:  'It  was 
for  the  legislature  of  Ohio  to  define  the  public  policy 
of  that  state  in  respect  of  life  insurance,  and  to  im- 
pose such  conditions  on  the  transaction  of  business 
by  life  insurance  companies  within  the  state  as  was 
deemed  best.  We  do  not  perceive  any  arbitrary 
classification  or  unlawful  discrimination  in  this  leg- 
islation, but  at  all  events  we  cannot  say  that  the 
Federal  Constitution  has  been  violated  in  the  exer- 
cise in  this  regard  by  the  state  of  its  undoubted 
power  of  corporations.' 


INSUEANCE  157 

Such  a  statute  is  not  invalid  as  being  class  legis- 
lation, since  if  an  act  falls  under  the  police  power 
the  legislature  must  judge  of  the  objects  upon  which 
the  statute  shall  operate.  The  court  cannot  declare 
it  void  on  the  ground  that  there  are,  in  its  opinion, 
other  objects  equally  deserving  of  the  attention  of 
the  legislature,  which  it  has  omitted  to  notice.  Con- 
tinental F.  Ins.  Co.  vs.  Whitaker,  112  Tenn.  159,  79 
S.  W.  Eep.  119. 

It  has  been  held  that  the  Missouri  statute  con- 
sidered in  the  reported  case  is  not  within  the  pro- 
hibition of  section  53,  article  4,  of  the  Constitution 
of  that  state,  the  court  saying:  *It  is  not  a  special 
law  regulating  the  practice  or  jurisdiction  or  a 
change  of  the  rules  of  evidence  in  any  judicial  pro- 
ceedings before  courts  or  other  tribunals.'  Jenkins 
vs.  Covenant  Mut.  L.  Ins.  Co.  171  Mo.  375,  71  S.  W. 
Hep.  688. 

In  John  Hancock  Mut.  L.  Ins.  Co.  vs.  Warren, 
181  U.  S.  73,  21  U,  S.  Sup.  Ct.  Rep.  535,  45  U.  S. 
(L.  ed.)  755,  the  court  sustained  the  Ohio  statute 
(Rev.  Stat.,  sec.  3625),  which  provides  that  *no  an- 
swer to  any  interrogatory  made  by  an  applicant,  in 
his  or  her  application  for  a  policy,  shall  bar  the  right 
to  recover  upon  any  policy  issued  upon  such  appli- 
cation, or  be  used  in  evidence  upon  any  trial  to  re- 
cover upon  such  policy,  unless  it  be  clearly  proved 
that  such  answer  is  wilfully  false  and  was  fraudu- 
lently made;  that  it  is  material,  and  induced  the  com- 
pany to  issue  the  policy,  and  that  but  for  such  answer 
the  policy  would  not  have  been  issued;  and,  more- 
over, that  the  agent  of  the  company  had  no  knowl- 
edge of  the  falsity  or  fraud  of  such  answer.' 


i58  COMMERCIAL  LAW 

In  Penn.  Mut.  L.  Ins.  Co.  vs.  Mechanics'  Sav. 
Bank  etc.  Co.  72  Fed.  Rep.  413,  19  C.  C.  A.  286,  37 
U.  S.  App.  692,  the  court  upheld  the  Pennsylvania 
statute,  the  provisions  of  which  are  as  follows: 
'Wlienever  the  application  for  a  policy  of  life  insur- 
ance contains  a  warranty  of  the  truth  of  the  answers 
therein  contained,  no  misrepresentation  or  untrue 
statement  in  such  application,  made  in  good  faith  by 
the  applicant,  shall  effect  a  forfeiture  or  be  a  ground 
of  defense  in  any  suit  brought  upon  any  policy  of 
insurance  issued  upon  the  faith  of  such  application, 
unless  such  misrepresentation  or  untrue  statement 
relate  to  some  matter  material  to  the  risk. ' 

And  in  Continental  F.  Ins.  Co.  vs.  Whitaker,  112 
Tenn.  151,  79  S.  W.  Rep.  119,  the  court  declared 
valid  the  Tennessee  statute  pro\ading  that  'no  writ- 
ten or  oral  misrepresentation  of  warranty  therein 
made  in  the  negotiation  of  a  contract  or  policy  of 
insurance,  or  in  the  application  therefor  by  the  as- 
sured, or  in  his  behalf,  shall  be  deemed  material  or 
defeat  or  void  the  policy  or  prevent  its  attaching, 
unless  such  misrepresentation  is  made  with  actual 
intent  to  deceive,  or  unless  the  matter  represented 
increased  the  risk  of  loss.'  "^ 

'  Northwestern  National  Life   Insurance  Co.  vs.  Biggs  in  7  Amer.  and 
Eng.  Anno.  Cases, 


CHAPTER  X. 

TORTS. 

Section  99.    Definition. 

It  was  shown  in  the  introductory  chapter  that 
ever}^  wrong  is  the  violation  of  some  right,  and  also 
that  rights  are  of  two  general  species :  those  general 
rights  which  every  member  of  a  society  has  against 
all  other  members,  and  those  special  rights  which  a 
person  acquires  as  against  some  other  particular  per- 
son or  persons,  by  agreement  or  contract  with  such 
person  or  persons.  A  violation  of  the  first  species 
of  rights  is  a  tort,  while  a  violation  of  the  second 
species  of  rights  is  a  breach  of  contract.  This  book 
up  to  this  time  has  been  taken  up  with  a  discussion  of 
contracts  and  its  various  branches.  In  general,  the 
subject  of  torts  does  not  enter  into  a  study  of  com- 
mercial law.  There  are,  however,  a  few  classes  of 
this  species  of  wrong  which  need  such  consideration 
in  this  connection.  The  torts  which  will  be  here  dis- 
cussed are  those  of  deceit,  trespass  to  personal  prop- 
erty, conspiracy,  and  infringements  of  patents,  copy- 
rights, and  trademarks. 

Section  100.    Deceit. 

Deceit  is  the  most  important  of  all  torts  from  the 
standpoint  of  commercial  law.  An  action  for  this 
tort  will  lie  whenever  one  person,  by  fraud,  induces 

159 


160  COMMERCIAL  LAW 

another  person  to  alter  his  condition  in  some 
respect  (generally  through  making  a  contract)  to  his 
damage. 

There  are  five  necessary  requisites  in  an  action 
for  deceit.  A  failure  to  prove  any  one  of  the  follow- 
ing five  elements  will  be  fatal  to  the  plaintiff's  cause 
in  an  action  of  this  character: 

(1)  There  must  be  a  misrepresentation  of  mate- 
rial fact: 

(2)  The  defendant  (in  the  action  for  deceit) 
must  have  known  the  statements  made  to  be  false : 

(3)  The  plaintiff  (in  the  action  for  deceit)  must 
not  have  known  the  statements  to  be  false,  but  must 
have  believed  them  to  be  true : 

(4)  The  defendant  must  have  made  the  state- 
ments with  the  intention  of  having  them  acted  upon: 
and 

(5)  The  plaintiff  must  have  actually  acted  upon 
the  statements  made  by  the  defendant,  and  as  a  result 
been  damaged  thereby. 

There  must  always  be  a  misrepresentation  of 
material  fact  as  the  first  element  in  an  action  for 
deceit.  This  misrepresentation,  however,  need  not 
always  consist  of  express  words.  There  may  be  a 
misrepresentation  either  (a)  by  express  words,  (b) 
by  actions,  or  (c)  by  concealment. 

In  an  action  for  deceit  the  necessity  for  proving 
the  knowledge  of  the  falsity  of  the  statement  by  the 
defendant  can  be  fulfilled  by  showing  either: 

(a)  That  the  defendant  actually  knew  the 
statement  to  be  false; 

(b)  That  he  made  the  statement  recklessly, 


TOETS  161 

without  taking  pains  to  ascertain  whether  it  was 
true  or  false; 

(c)  That  he  made  the  statement  positively, 
when  in  fact  it  was  only  a  matter  of  opinion;  or 

(d)  That  the  defendant  stood  in  such  a  relation 
to  the  subject-matter  that  it  was  his  duty  to  know 
the  truth  concerning  the  matter. 

It  is  sufficient  that  the  representations  were 
either  made  especially  to  the  plaintiff;  or  to  a  class 
of  persons  in  which  class  the  plaintiff  was  included; 
or  generally  to  the  public  with  the  intention  of  in- 
ducing anyone  who  would  to  act  upon  them. 

The  law  of  contracts  and  torts  come  very  closely 
together  at  the  subject  of  deceit.  Deceit,  as  above 
stated,  is  generally  used  to  induce  a  person  to  enter 
into  some  contract,  and  in  such  cases  the  injured 
party  generally  has  a  choice  of  remedies;  he  can 
either  sue  in  tort  for  the  deceit,  or  waive  the  tort  and 
sue  in  contract  for  the  breach  of  the  contract  arising 
from  the  failure  of  the  representations  to  be  true. 

Section  101.    Trespass  to  Personal  Property. 

An  action  for  trespass  to  personal  property,  for- 
merly, only  lay  in  cases  where  the  property  was 
destroyed,  or  where  it  was  taken  from  the  possession 
of  the  owner,  trespass  de  bonus  asportatis.  Later  the 
action  was  allowed  in  cases  of  damages  to  personal 
property. 

The  most  important  class  of  trespasses  to  per- 
sonal property  are  those  resulting  from  the  depri- 
vation of  the  owner  of  his  possession.  Such  ti-es- 
passes  are  now  known  as  conversions. 

Every  act  of  control  over  personal  property, 
11 


162  COMMEECIAL  LAW 

without  the  owner's  authority,  and  in  violation  of 
his  rights,  is  a  conversion.  Sawing  trees  belonging 
to  another  into  logs  is  a  conversion,  as  is  also  making 
wheat  into  flour,  or  the  adulteration  of  liquor  by  a 
carrier.  It  is  a  conversion  to  collect  a  bill  or  note 
belonging  to  another  without  the  authority  of  the 
owner,  or  to  sue  a  note  to  judgment,  without  such 
consent.  The  cancellation  of  a  certificate  of  mem- 
bership in  a  Board  of  Trade,  or  the  wrongful  can- 
cellation of  stock,  amounts  to  a  conversion. 

Not  every  tortious  act,  however,  which  affects 
personal  property  is  a  conversion.  Damaging  per- 
sonal property,  or  even  interference  with  the  own- 
er's use  of  the  property,  without  depriving  him  of 
its  possession  does  not  amount  to  a  conversion. 
Wrongful  use  of  the  chattel  of  another  is  not  a  con- 
version where  there  is  no  denial  of  the  owner's  title. 
Assertion  of  ownership  unaccompanied  by  any  act 
of  ownership  will  not  amount  to  a  conversion.  To 
constitute  conversion  there  must  be  either  an  actual 
conversion  of  the  property  to  the  use  of  the  defend- 
ant, or  a  constructive  conversion  by  failure  to  deliver 
up  the  property  on  demand.  As  a  general  rule,  the 
question  of  intention  is  immaterial  in  determining 
whether  or  not  there  has  been  a  conversion. 

Section  102.    Conspiracy. 

Conspiracy  consists  in  the  joining  together  of  two 
or  more  persons  to  do  any  imlawful  act  to  the  injury 
of  some  third  person.  The  exact  boundaries  of  the 
scope  of  this  action  has  never  been  clearly  defined; 
the  scope  of  the  civil  action  is  somewhat  wider  than 
that  of  the  civil  action  of  the  same  name,  and  the 


TORTS  163 

scope  of  each  has  been  much  widened  in  recent  years. 
There  must  be,  however,  in  all  cases  both  an  unlaw- 
ful act  and  an  injury.  An  agreement  between  two 
or  more  persons,  to  injure  the  business  of  a  third 
person,  of  whom  they  were  either  competitors  or 
enemies,  is  a  conspiracy. 

Section  103.    Infringement  of  Patents,  Copyrights 
or  Trademarks. 

A  species  of  tort  of  much  importance  in  the  field 
of  commercial  law  is  that  arising  from  the  infringe- 
ment of  patents,  copyrights,  or  trademarks. 

A  patent  is  a  license  granted  by  the  government 
to  an  inventor,  giving  him  for  a  certain  period,  the 
exclusive  right  to  the  use  of  his  invention. 

A  copyright  is  **the  exclusive  privilege,  secured 
according  to  certain  legal  forms,  of  printing,  or 
otherwise  multiplying,  publishing,  and  vending 
copies  of  certain  literary  or  artistic  productions." 

Both  patents  and  copyrights  are  entirely  statu- 
tory in  their  origin  and  are  entirely  governed  by  the 
provisions  of  the  Federal  Statutes. 

The  rights  possessed  by  holders  of  either  patents 
or  copyrights  is  a  species  of  personal  property  and 
is  protected  by  the  law  to  the  same  extent  as  any 
other  species  of  property.  In  case  of  the  infringe- 
ment of  a  patent  or  a  copyright,  the  owner  of  such 
patent  or  copjTight  may  either  sue  in  tort  for  the 
damages  occasioned  by  the  infringement,  or  obtain 
an  injunction  against  the  infringing  party.  A  court 
of  equity  has  the  power  to  grant  both  an  injunction 
and  damages  in  the  same  suit. 

A   trademark  is   any   emblem,   word,   or  sign 


164  COMMERCIAL  LAW 

adopted  by  any  person  as  a  designating  mark  for  his 
business  or  products.  Trademarks  are  of  common 
law  instead  of  statutory  origin,  although  it  is  pro- 
vided, by  the  Federal  Statutes,  that,  trademarks  used 
in  interstate  commerce  may  be  registered  with  the 
national  government. 

No  trademark  is  valid  which  is  descriptive  of  the 
article  with  which  it  is  employed,  the  reason  for  this 
being  that  any  person  making  or  selling  an  article 
has  an  equal  right  to  the  use  of  all  words  or  pictm'es 
descriptive  of  the  same.  Geographical  names  are 
good  as  trademarks,  except  as  against  persons  in  the 
same  place,  and  personal  names  are  good  as  trade- 
marks, except  as  against  persons  of  the  same  name ; 
and  even  in  the  cases  of  the  exceptions  just  noted  a 
person  may  be  enjoined  from  using  his  own  name  or 
the  name  of  the  place  where  he  is  engaged  in  busi- 
ness, if  he  is  using  such  a  trademark  for  piu'poses 
of  fraud. 


CHAPTER  XI. 
CRIMINAL  LAW. 

Section  104.    Introductory. 

Crimes  like  torts  have  only  a  secondary  place  in 
the  study  of  conunercial  law,  but  a  few  crimes  require 
some  brief  mention  in  this  connection.  It  must  be 
remembered  that  a  tort  and  a  crime  may  both  arise 
from  the  same  act,  the  tort  being  the  wi'ong  to  the 
indiWdual  and  the  crime  the  wrong  to  the  public. 

Section  105.    Larceny  and  Embezzlement. 

Larceny  is  the  felonious  taking  and  carrying  away 
of  the  personal  goods  of  another. 

Embezzlement  consists  in  the  converting  to  one's 
own  use  of  property  lawfully  in  one's  possession, 
but  the  property  of  another. 

If  the  property  of  a  master  is  taken  by  a  servant, 
the  crime  is  larceny;  if  the  property  of  a  principal  is 
taken  by  an  agent,  the  crime  is  embezzlement.  In 
some  states  all  distinction  between  larceny  and  em- 
bezzlement has  been  abolished  by  statute. 

Any  species  of  personal  property  may  be  the  sub- 
ject either  of  larceny  or  embezzlement.  A  person, 
however,  at  common  law,  cannot  be  held  guilty  of 
embezzlement  for  taking  the  whole  of  certain  prop- 
erty of  which  an  undivided  portion  (no  matter  how 
small)  belongs  to  him.  Thus,  if  a  collector  takes  a 
bill  to  collect  for  ten  per  cent  commission  and  after 
collecting  the  bill  keeps  the  whole  of  it,  he  is  not 

165 


166  COMMERCIAL  LAW 

guilty  of  embezzlement.   In  some  states  this  has  bMn 
changed  by  statute. 

Section  106.    Counterfeiting. 

The  sixth  clause  of  the  Eighth  Section  of  the  First 
Article  of  the  United  States  Constitution  provides 
that  Congress  shall  have  power:  *'To  provide  for  the 
punishment  of  counterfeiting  the  securities  and  cur- 
rent coin  of  the  United  States." 

This  clause  is  probably  unnecessary.  The  power 
to  coin  money  carries  with  it  the  power  to  protect 
such  coinage  by  punishing  its  counterfeiting.  Espe- 
cially would  this  be  true  under  the  liberal  interpre- 
tation of  the  implied  powers  of  Congress  given  in 
McCulloch  vs.  Maryland,  and  since  followed.  *'The 
power  of  coining  money  and  of  regulating  its  value 
was  delegated  to  Congress  by  the  Constitution  for 
the  very  purpose,  as  assigned  by  the  framers  of  that 
instrument,  of  creating  and  preserving  the  uni- 
formity and  purity  of  such  a  standard  of  value ;  and 
on  account  of  the  impossibility  which  was  foreseen 
of  otherwise  preventing  the  inequalities  and  the  con- 
fusion necessarily  incident  to  different  views  of 
policy,  which  in  different  communities  would  be 
brought  to  bear  on  this  subject.  The  powers  to  coin 
money  being  thus  given  to  Congress,  founded  on 
public  necessity,  it  must  carry  with  it  the  correlative 
power  of  protecting  the  creature  and  object  of  that 
power.  It  cannot  be  imputed  to  wise  and  practical 
statesmen,  nor  is  it  consistent  with  common  sense, 
that  they  should  have  vested  this  high  and  exclusive 
authority,  and  with  a  view  to  partaking  of  the  magni- 
tude of  the  authority  itself,  only  to  be  rendered  im" 


CEIMINAL  LAW  16T 

mediately  vain  and  useless,  as  must  have  been  the 
case  had  the  government  been  left  disabled  and 
impotent  as  to  the  only  means  of  securing  the  objects 
in  contemplation.  Under  this  clause  Congress  has 
power  to  punish  persons  who  bring  into  the  United 
States  counterfeit  money,  and  also  those  who  coun- 
terfeit notes  of  foreign  banks.  This  last  power  prob- 
ably belongs  to  Congress  under  the  power  to  define 
and  punish  "  *  offenses  against  the  laws  of  nations.'  " 
This  clause  does  not  prevent  the  states  from  passing 
laws  for  the  punishment  of  the  crime  of  circulating 
counterfeit  coin  of  the  United  States  within  the 
state;  the  two  offenses  of  counterfeiting  the  coin 
and  passing  counterfeit  money  are  essentially  differ- 
ent ia  their  character. 

Section  107:    False  Weights  and  Measures. 

The  use  of  false  weights  and  measures  is  another 
crime  of  great  danger  to  commercial  transactions. 
The  power  to  pass  laws  on  this  subject  belongs  to 
each  state  in  the  exercise  of  the  police  power.  These 
matters  are  sometimes  regulated  by  state  statute, 
and  sometimes  by  city  and  town  ordinances. 

Section  108.     Crimes  Under  the  Interstate  Com- 
merce Act. 

The  criminal  provisions  of  the  National  Inter- 
state Commerce  Act  will  be  discussed  in  Chapter 
XV  of  this  volume. 


CHAPTER  Xn. 
DAMAGES. 

Section  109.    Definition  and  Purpose. 

Damages  are  the  pecuniary  reparation  which  the 
law  compels  a  wrongdoer  to  make  to  the  person  in- 
jured by  his  wrong.^  The  pTirposes  for  which  dam- 
ages are  given,  in  general,  are  to  compensate  the 
injured  party.  Such  damages  are  called  compen- 
satory damages.  In  a  few  classes  of  cases,  where 
the  defendant  has  been  guilty  of  extreme  miscon- 
duct, punitive  damages  (i.e.,  for  the  punishment  of 
the  defendant)  may  be  recovered  in  addition  to  the 
compensatory  damages. 

Section  110.    Consequences  and  Losses. 

For  the  purposes  of  determining  liability,  the 
consequences  of  wrongful  conduct  are  divided  into 
proximate  consequences,  and  remote  consequences. 
Compensation  can  be  recovered  for  losses  which  are 
the  proximate  consequences  of  wrongful  conduct, 
but  not  for  losses  which  are  the  remote  consequences. 
Losses  are  divided  into  direct  and  consequential 
losses.  Direct  losses  are  such  losses  as  proceed  im- 
mediately from  wrongful  conduct,  without  the  inter- 
vention of  any  intermediate  cause.  Direct  losses 
must  necessarily  be  proximate  consequences  of  the 

*  Hale  on  DamageB,  p.  1. 

169 


170  CQMMEECIAL  LAW 

act,  and,  therefore,  compensation  ia  alwajs  reaoYer- 
able  in  such  cases.  Consequential  losses  may  bt 
either  proximate  or  remote. 

*' Consequential  losses  are  proximate  when  the 
natural  and  probable  effect  of  the  wrongful  conduct 
under  the  circumstances  is  to  set  in  operation  the 
intervening  cause  from  which  the  loss  directly  re- 
sults. When  such  is  not  the  natural  and  prob- 
able effect  of  the  wrongful  conduct,  the  losses  are 
remote."^ 

Section  111.    Damages  in  Contract. 

The  leading  case,  on  the  subject  of  what  injmes 
resulting  from  a  breach  contract,  damages  may  be 
recovered  from,  is  that  of  Hadley  vs.  Baxendale,* 
and  the  principles  governing  this  subject  cannot  be 
expressed  better  than  in  the  words  of  this  decision: 

**We  think  the  proper  rule  in  such  a  case  as  the 
present  is  this:  Where  two  parties  have  made  a 
contract  which  one  of  them  has  broken,  the  dam- 
ages which  the  other  party  ought  to  receive  in  re- 
spect to  such  breach  of  contract  should  be  such  as 
may  fairly  and  reasonably  be  considered  either 
breach  of  contract  itself,  or  such  as  may  reasonably 
be  supposed  to  have  been  in  the  contemplation  of 
both  parties  at  the  time  they  made  the  contract,  as 
the  probable  result  of  the  breach  of  it.  Now,  if  the 
special  circumstances  under  which  the  contract  was 
actually  made  were  communicated  by  the  plaintiffs 
to  the  defendants,  and  thus  known  to  both  parties, 
the  damages  resulting  from  the  breach  of  such  a  coa- 

'  Hale  on  Damages,  p,  39. 

*9  Exeh.  341;  26  Eng.  Law  &  Eq.  398. 


DAMAGES  iri) 

tract  which  they  would  reasonably  contemplate 
would  be  the  amount  of  injury  which  would  ordi- 
narily follow  from  a  breach  of  contract  under  these 
special  circimastances  so  known  and  communicated. 
But,  on  the  other  hand,  if  these  special  circumstances 
were  wholly  imknown  to  the  party  breaking  the  con- 
tract, he,  at  most,  could  only  be  supposed  to  have 
had  in  his  contemplation  the  amount  of  injury  which 
would  arise  generally,  and,  in  the  great  multitude  of 
cases,  not  affected  by  any  special  circumstances  from 
such  a  breach  of  contract;  for,  had  the  special  cir- 
cumstances been  known,  the  parties  might  have  spe- 
cially provided  for  the  breach  of  contract  by  special 
terms  as  to  the  damages  in  that  case,  and  of  this  ad- 
vantage it  would  be  very  unjust  to  deprive  them. 
The  above  principles  are  those  by  which  we  think 
the  jury  ought  to  be  guided  in  estimating  the  dam- 
ages arising  out  of  any  breach  of  contract.'' 

Promises  to  marry  are  the  only  class  of  contracts 
for  the  breach  of  which  exemplary  or  punitive  dam- 
n^ges  may  be  given. 


CHAPTER  Xin. 
EQUITY  JURISPRUDENCE. 

Section  112.    Definition  and  Scope  of  Equity. 

Equity  is  a  supplemental  system  of  jurisprudence 
developed  in  the  fourteenth  and  fifteenth  centuries 
for  the  purpose  of  supplying  the  deficiencies  of  the 
common  law;  in  other  words,  to  take  jurisdiction 
over  those  cases  where  no  relief  could  be  obtained  at 
the  common  law. 

Applying  the  general  piinciple  that  equity  will 
only  take  jurisdiction  where  there  is  no  relief  pos- 
sible at  law,  it  follows  that,  in  general,  the  fields  of 
the  jurisdiction  of  the  equity  courts  and  of  the  com- 
mon law  courts  will  be  distinct  from  each  other,  and 
that  whenever  one  set  of  courts  have  jurisdiction, 
the  other  will  not. 

In  some  cases,  however,  we  find  concurrent  juris- 
diction by  the  two  courts.  Such  concurrent  jurisdic- 
tion may  arise  in  four  different  ways : 

(a)  Equity  may  take  jurisdiction  on  account  of 
the  fact  that  there  is  no  remedy  at  law,  and  later  a 
conamon  law  remedy  may  be  given. 

(b)  Equity  may  take  jiu'isdiction  in  cases  where 
there  is  a  common  law  remedy,  which  is,  however, 
not  cei-tain,  complete,  and  adequate. 

(c)  In   cases    where   jurisdiction   is    given   to 

173 


174  COMMERCIAL  LAW 

equity  courts,  by  statute,  over  cases  where  the  com- 
mon law  courts  already  have  jurisdiction. 

(d)  Where  an  equity  court  properly  acquires 
jurisdiction  on  account  of  some  peculiar  equitable 
principle  or  remedy  involved  in  the  suit,  such  coiu-t 
may  also,  in  the  same  case,  grant  other  relief  which 
could  have  been  obtained  at  common  law. 

Section  113.    Division  of  Equity. 

Equity  jurisdiction  may  be  divided  into  four 
great  divisions,  as  follows: 

(a)  Equitable  titles. 

(b)  Equitable  rights. 

(c)  Those  cases  where  equity  takes  jurisdiction 
on  account  of  the  character  or  number  of  the  parties. 

(d)  Equitable  remedies. 

Under  equitable  titles  are  included  such  titles  as 
are  only  recognized  and  protected  in  courts  of  equity. 
Under  this  head  are  included  trusts,  equitable  liens, 
and  the  interests  of  the  mortgagor  under  certain 
circiunstances. 

In  the  division  of  equitable  rights  we  have  the 
cases  where  the  title  itself  is  recognized  by  the  com- 
mon law,  but  where  certain  rights  in  connection 
therewith  are  only  recognized  in  equity.  Under  this 
head  are  included  such  rights  as  contribution  and 
subrogation  and  relief  against  accidents,  mistake,  etc. 

The  cases  where  equity  takes  jurisdiction  on  ac- 
count of  the  character  or  number  of  the  parties  in- 
clude : 

(a)  Suits  for  or  against  married  women. 

(b)  Suits  between  husband  and  wife. 

(c)  Suits  between  partners. 


EQUITY  JURISPRUDENCE  176 

(d)  Where  there  are  a  large  number  of  persona 
with  mutually  diverse  interests,  equity  may  take 
jurisdiction  in  order  to  prevent  the  multiplicity  of 
suits.  At  common  law,  there  can  be  but  two  sides 
to  the  case,  although  there  can  be  any  number  of 
defendants  or  plaintiffs,  provided  the  defendants 
and  all  the  plaintiffs  have  a  common  joint  interest. 

In  equity,  however,  any  number  of  mutually 
diverse  interests,  can  be  adjudicated  in  the  same  suit. 

Section  114.    Trusts. 

A  trust  involves  the  separation  of  the  legal  title 
and  the  beneficial  use;  in  other  words,  one  person 
holds  the  legal  title  for  the  benefit  of  someone  else. 
There  are  three  parties  in  each  trust:  the  settlor, 
who  creates  the  trust,  the  trustee  who  holds  the  legal 
title,  and  the  cestui  que  trust,  who  has  the  bene- 
ficial use. 

The  settlor  may  make  himself  either  the  trustee 
or  the  cestui  que  trust.  The  trustee  and  the  cestui 
que  trust  can  never  be  the  same  person. 

Section  115.    Classification  of  Trusts. 

Trusts  are  divided  into  express  and  implied 
trusts.  An  express  trust  is  one  created  by  the  ex- 
press words  of  the  settlor.  Express  trusts  relative 
to  real  estate,  can  only  be  created  in  writing.  Im- 
plied trusts  are  subdivided  into  resulting  and  con- 
structive trusts. 

A  resulting  trust  is  one  where  the  courts  hold 
that  the  parties  intended  to  create  a  trust  although 
they  did  not  do  so  expressly.  The  most  common 
instances  of  resulting  trusts  are  the  cases  where 


176  COMMERCIAL  LAW 

property  is  purchased  with  the  money  of  one  person 
and  the  title  taken  in  the  name  of  another. 

In  the  case  of  constructive  trusts,  the  trust  is 
created  against  the  intention  of  the  parties.  Con- 
structive trusts  arise  in  cases  where  there  has  been 
fraud  or  abuse  of  a  confidential  relation,  or  where 
the  transaction  is  of  a  class  which  presents  such 
opportunity  for  fraud  that  the  coiu'ts  discourage 
them.  Trusts  are  also  divided  into  active  and  pas- 
sive trusts.  In  an  active  trust,  the  trustee  may  have 
certain  duties  to  perfoim.  In  the  case  of  a  passive 
trust,  the  trustee  has  no  duties  to  perform  and  merely 
holds  the  title  in  his  name. 

Still  other  classifications  of  trusts  are  those  into 
executed  and  executory  trusts,  and  into  private  and 
charitable  trusts.  Charitable  trusts  are  those  created 
for  educational,  religious  and  similar  purposes. 

Section  116.    Trustees. 

Trustees  may  be  appointed  either  by  the  settlor 
or  by  a  court  of  equity.  It  is  an  equitable  maxim  that 
equity  will  not  suffer  a  trust  to  fail  for  the  want  of 
a  trustee.  Equity  courts  also  have  the  right  to  re- 
move a  trustee  who  fails  to  properly  perform  his 
duties.  The  highest  degree  of  honesty  and  good 
faith  is  required  from  a  trustee  but  only  an  ordinary 
degree  of  care  and  skill.  Any  person  may  be  a  trus- 
tee, at  least,  temporarily. 

Section  117.    Equitable  Relief  in  the  Case  of  Con- 
tracts. 

The  peculiar  equitable  reliefs  in  the  case  of  con- 
tracts are  orders  for  the  specific  performance  of  the 


EQUITY  JimiSPRUBENCE  177 

contract,  and  for  the  reformation  or  cancellation  of 
the  contract. 

Specific  performance  is  an  order  by  a  court  of 
equity  that  a  legal  contract  be  carried  into  effect 
according  to  its  terms. 

The  injured  party  may  resort  to  k  court  of  equity 
for  specific  performance,  when  the  legal  remedy  of 
pecimiary  damages  is  not  a  complete  and  adequate 
relief. 

This  form  of  equitable  relief  is  limited  to  con- 
tracts for  the  sale  of  property,  and  contracts  for  in- 
surance. There  can  be  no  specific  performance  of 
contracts  for  personal  services,  partnership  con- 
tracts, contracts  to  marry,  or  contracts  for  the  pay- 
ment of  a  siun  of  money. 

The  specific  performance  of  a  contract  for  the 
pajTnent  of  money,  would  be  identical  in  its  effect 
with  that  of  a  judgment  at  law  for  damages.  The 
compelling  by  judicial  decree  of  the  specific  perform- 
ance of  a  contract  to  marry  would  be  in  violation  of 
the  ideas  and  principles  of  modem  society. 

The  proper  forms  of  equitable  relief  in  the  case 
of  written  instruments  entered  into  under  the  in- 
fluence of  fraud  or  mistake  are  the  reformation  or 
the  cancellation  of  such  \\Titten  instrument. 

Equity  will  decree  the  cancellation  of  a  written 
instrument  in  two  classes  of  cases ;  (a)  where  the  in- 
strument, although  absolutely  void,  is  valid  on  its 
face;  and  (b)  where  it  is  voidable  on  the  ground  of 
fraud  or  mistake. 


12 


178  COMMERCIAL  LAW 

Section  118.    Injunctions. 

An  injunction  is  a  writ  framed  according  to  the 
circumstances  of  the  case  commanding  an  act  which 
the  court  regards  as  essential  to  justice,  or  restrain- 
ing an  act  which  it  esteems  contrary  to  equity  and 
good  conscience. 

An  interlocutory  or  preliminary  injunction  is  one 
issued  during  the  pendency  of  the  suit,  prior  to  the 
final  hearing.  Such  an  injunction  continues  in  force 
until  the  final  hearing  of  the  case,  unless  sooner  re- 
scinded by  a  subsequent  order  of  the  court.  The 
object  of  interlocutory  injunctions  is  to  keep  things 
in  statu  quo,  not  to  determine  the  right  itself. 

When  there  is  necessity  for  prompt  action  an 
interlocutory  injunction  may  be  issued  without  notice 
to  the  defendant.  Such  an  injunction  is  called  an 
ex  parte  injunction.  As  soon  as  he  has  notice  of 
its  issuance  the  defendant  may  come  in  and  move  to 
dissolve  such  injunction.  In  the  Federal  Courts  no 
ex  parte  injunctions  are  issued,  but  the  same  results 
are  obtained  by  what  are  known  as  restraining 
orders. 

A  perpetual  or  final  injunction  is  one  granted  at 
the  final  hearing  of  the  case.  No  perpetual  injunc- 
tion can  be  granted  by  an  order  upon  affidavits. 

Among  the  important  classes  of  cases  where  in- 
junctions will  be  granted,  are  those  against  waste, 
against  nuisance  and  against  trespass,  where  the 
trespass  would  inflict  irreparable  damage  or  is  a 
frequently  repeated  trespass. 

Injunctions  will  not  ordinarily  be  granted  agahist 
personal  torts. 


BQIHTY  JUEISPRUDENCE  179 

It  was  formerly  held  that  an  injunction  would 
never  issue  against  the  commission  of  a  criminal  act. 
This  doctrine  has  been  considerably  modified  during 
the  past  few  years,  and  the  recognized  rule  now 
seems  to  be  that  where  the  issuing  of  an  injunction 
is  warranted  by  the  necessity  of  protection  to  prop- 
erty interests,  the  fact  that  a  crime  or  statutory 
offense  must  be  enjoined  as  incidental  thereto  will 
not  operate  to  deprive  the  court  of  its  jurisdiction. 

The  general  rule  may  be  stated  to  be  that  the 
breach  of  an  affirmative  promise  in  a  contract  cannot 
be  prevented  b}^  an  injunction  (the  proper  remedy 
being  specific  performance),  but  that  the  breach  of 
a  negative  promise  may  be.  For  example,  injunc- 
tions have  been  issued  against  the  violation  of  such 
agreements  as  not  to  disclose  information,  or  not  to 
manufacture  and  sell  a  certain  article. 

A  common  class  of  injunctions  are  those  for  the 
protection  of  patents  and  copyrights. 

Section  119.    Mortgages. 

A  mortgage  is  a  conveyance  of  either  real  or  per- 
sonal property,  as  security  for  the  payment  of  a  debt, 
or  the  performance  of  some  act. 

Under  the  common  law,  a  mortgage  was  con- 
sidered merely  what  it  imports  to  be,  namely,  a  deed 
of  the  land  with  a  condition  subsequent.  The  con- 
dition subsequent  which  might  defeat  the  estate  of 
the  grantee,  and  re-invest  the  estate  in  the  grantor, 
was  the  repayment  of  the  money  by  the  grantor.  If 
such  payment  was  not  made  strictly  according  to  the 
terms  of  the  deed,  the  estate  in  the  mortgage  became 
absolute.   Upon  the  giving  of  the  mortgage  the  mort- 


180  COMMERCIAL  LAW 

gagee  acquired  the  present  legal  estate,  while  the 
mortgagor  only  retained  a  possibility  of  revertor. 

Possession  passed  to  the  grantee,  unless  reserved 
to  the  grantor  by  the  terms  of  the  deed. 

Equity  early  took  a  different  view  of  mortgage. 
Applying  the  doctrine  that  equity  will  look  at  the 
intent  rather  than  the  form,  equity  considered  the 
debt  as  the  principal  thing  and  the  mortgage  merely 
as  security  therefor;  with  the  result  that  a  failure 
to  pay  the  mortgage  promptly  on  time  was  held  not 
to  work  a  forfeiture  of  the  mortgagor's  interest,  but 
merely  to  render  him  liable  for  interest  on  the 
amount  of  the  mortgage  until  its  payment.  In  other 
words,  the  damage  for  the  delay  in  the  payment  of 
the  mortgage  was  considered  the  interest  on  the  sum 
of  money  withheld  for  the  time  the  same  was  with- 
held. At  first  equity  only  relieved  against  the  for- 
feiture of  the  mortgagor's  interest,  when  the  act 
which  worked  such  forfeiture  was  the  result  of  an 
accident.  Such  relief,  however,  was  soon  extended 
to  other  cases. 

**  Because  of  the  fact  that  a  mortgage  is  regarded 
as  of  a  dual  character — a  conveyance  of  an  estate  in 
lands,  and  a  security  for  a  debt — bearing  one  charac- 
ter in  a  court  of  law  and  another  in  a  court  of  equity, 
a  mortgage  at  the  present  day,  in  the  absence  of  stat- 
utes providing  otherwise,  vests  the  legal  title  to  the 
mortgaged  property  in  the  mortgagee,  at  any  rate, 
after  condition  broken  and  possession  taken.  "^ 

After  equity  began  to  relieve  against  forfeitiu'e 
in  the  case  of  mortgages,  there  was  a  period  during 
which  equity  would  relieve  against  such  forfeitures 

'  American  and  English  Eney.  of  Law,  Vol.  XX,  900. 


EQUITY  JUEISPEUDENCE  181 

after  any  period  of  time  after  breach.  This,  howevei*, 
was  soon  seen  to  be  going  too  far,  as  it  worked  a 
great  hardship  upon  the  mortgagee  by  preventing 
him  from  at  any  time  acquiring  a  good  title.  To 
remedy  this  injustice,  and  to  produce  an  equilibrium 
between  the  rights  of  mortgagor  and  mortgagee,  the 
system  of  foreclosure  of  mortgages  was  introduced. 

A  foreclosure  is  any  proceeding  by  which  the 
mortgagor's  equity  of  redemption  in  the  property  is 
cut  off  beyond  possibility  of  recall."^ 

At  least  eight  different  methods  of  foreclosure 
are  in  force  in  different  states  in  this  country,  as 
follows : 

(a)  Strict  foreclosure. 

(b)  Equitable  foreclosure. 

(c)  Scire  facias. 

(d)  Rule  nisi. 

(e)  Writ  of  entry. 

(f)  Ejectment. 

(g)  Advertisement  and  sale  under  a  power. 
(h)     Entry  and  possession. 

Upon  a  strict  foreclosure  of  a  mortgage  the  prop- 
erty becomes  absolutely  vested  in  the  mortgagee  and 
the  right  of  the  mortgagor  to  redeem  is  gone. 

In  the  case  of  an  equitable  foreclosure,  where 
the  property  is  sold  to  satisfy  the  mortgage,  the 
mortgagor  is  allowed  to  redeem  the  property  from 
the  purchaser,  within  a  certain  specified  time. 

A  chattel  mortgage  is  a  conditional  transfer  or 
conveyance  of  the  prox:)crty,  and  if  the  conditions  are 
not  duly  performed  the  whole  title  vests  absolutely 
at  law  in  the  mortgagee. 

'ADBonia  Nat.  Bank's  Appeal,  58  Conn.  260. 


182  COMMERCIAL  LAW 

The  protections  given  to  the  mortgagor  of  tqsX 
property  are,  in  general,  wanting  to  mortgagors  of 
personal  property.  The  difference  is  mainly  due  to 
the  less  degree  of  importance  attached  by  the  law 
to  personal  than  to  real  property.  It  is  sometimes 
provided  by  statute  however,  that  certain  mortgages 
of  personal  property  must  be  foreclosed  in  court. 
For  example,  the  law  of  Illinois  makes  this  provision 
in  the  case  of  mortgages  of  household  furniture, 
except  in  the  case  of  purchase  money  mortgages. 

A  bill  of  sale  absolute  on  its  face  may  be  shown 
by  parol  to  have  been  intended  as  a  mortgage. 


CHAPTER  XIV. 
BANKRUPTCY.* 

Section  120.    National  and  State  Bankruptcy  Laws. 

The  classes  of  legislative  powers  the  right  to  ex- 
ercise which  have  occasioned  the  principal  contro- 
versies between  the  National  and  State  governments, 
are  those  legislative  powers  which  the  United  States 
Constitution  grants  to  the  National  government  but 
does  not  prohibit  to  the  State  governments. 

An  illustration  of  this  class  is  to  be  found  in  the 
subject  of  bankruptcy  laws.  The  power  to  pass  such 
laws  is  given  to  Congress,  but  it  is  not  denied  to  the 
states.  The  Supreme  Court  has  decided  that  with 
certain  restrictions  bankruptcy  laws  may  be  passed 
by  the  states,  but  such  laws  are  superseded  by  any 
Federal  laws  which  may  be  passed  on  the  subject. 
The  extent  of  the  right  of  the  several  states  to  pass 
bankruptcy  laws  is  fully  discussesd  by  the  Supreme 
Court  in  the  case  of  Sturges  vs.  Crownshield,  and 
Ogden  vs.  Saunders.  The  substance  of  these  deci- 
sions is  to  uphold  the  rights  of  the  several  states  to 
pass  bankruptcy  laws,  subject  to  the  following 
restrictions : 

First.  Under  Section  10  of  Article  1  of  the  Con- 
stitution, which  forbids  any  state  to  pass  any  law 

•  Matters  relating  solely  to  procedure  in  bankruptcy  have  been  in 
the  main  omitted  from  this  chapter.  In  a  number  of  places  in  the  chapter 
th*  exact  wording  of  the  Federal  statute  has  been  followed. 

183 


184  COMMERCIAL  LAW 

impairing  the  obligation  of  contracts,  no  bankruptcy 
law  passed  by  any  state  can  affect  any  debt  con- 
tracted before  the  time  of  the  passage  of  such  act. 
This,  however,  does  not  apply  to  laws  merely  chang- 
ing the  procedm'e  in  bankruptcy  without  affecting 
the  substantive  right. 

Second.  The  extra  territorial  force  of  such  laws 
is  greatly  limited.  In  general  they  cannot  affect 
debts  owed  to  non-residents  of  the  state. 

Third.  Laws  passed  by  the  several  states  on  the 
subject  of  bankruptcy  are  subservient  to  any  laws 
which  Congress  may  pass  on  the  subject.  In  the  past 
Congress  has  left  this  field  of  the  law  almost  entirely 
to  the  state  legislatures.  Previous  to  the  existing 
law  on  this  subject,  passed  in  1898,  only  three  na- 
tional bankruptcy  laws  had  been  passed.  The  first 
two  acts,  those  of  1802  and  1840,  were  very  short 
lived.  This  third  act,  passed  in  1867,  was  in  force  for 
eleven  years. 

The  remainder  of  this  chapter  will  be  devoted  to 
a  discussion  of  the  provisions  of  the  existing  National 
Bankruptcy  Law. 

Section  121.    Bankruptcy  Courts. 

The  Courts  having  jurisdiction  under  the  Na- 
tional Bankruptcy  Act  are  the  various  district  courts 
of  the  United  States  in  the  several  states,  the  district 
courts  of  the  several  territories,  and  the  Supreme 
Court  of  the  District  of  Columbia.  To  assist  these 
courts  Referees  in  Bankruptcy  are  appointed  in  each 
district. 


BANKRUPTCY  185 

Section  122.    Voluntary  Bankruptcy. 

The  statute  provides  that  any  natural  person  who 
owes  debts  may  become  a  voluntary  bankrupt.  This 
right  does  not  belong  to  corporations.  The  decisions 
are  in  conflict  as  to  whether  an  infant  may  be 
adjudged  a  bankrupt. 

Section  123.    Involuntary  Bankruptcy. 

Acts  of  bankruptcy  by  a  person  shaU  consist  of 
his  having: 

(1)  Conveyed,  transferred,  concealed,  or  re- 
moved, or  permitted  to  be  concealed  or  removed,  any 
part  of  his  property  with  intent  to  hinder,  delay,  or 
defraud  his  creditors,  or  any  of  them;  or 

(2)  Transferred,  while  insolvent,  any  portion  of 
his  property  to  one  or  more  of  his  creditors  with  in- 
tent to  prefer  such  creditors  over  his  other  creditors; 
or 

(3)  Suffered  or  permitted,  while  insolvent,  any 
creditor  to  obtain  a  preference  through  legal  pro- 
ceedings, and  not  having  at  least  five  days  before  a 
sale  or  final  disposition  of  any  property  affected  by 
such  preference  vacated  or  discharged  such  prefer- 
ence ;  or 

(4)  Made  a  general  assignment  for  the  benefit 
of  his  creditors ;  or 

(5)  Admitted  in  writing  his  inability  to  pay  his 
debts  and  his  willingness  to  be  adjudged  a  bankrupt 
on  that  ground. 

To  take  advantage  of  any  act  of  bankruptcy  a 
petition  to  have  the  person  committing  such  act  de- 


186  COMMEECIAL  LAW 

clared  a  bankrupt  must  be  filed  within  four  montJis 
after  the  commission  of  such  act. 

A  person  shall  be  deemed  to  have  given  a  prefer- 
ence if,  being  insolvent,  he  has,  without  four  months 
before  the  filing  of  the  petition,  or  after  the  filing  of 
the  petition  and  before  the  adjudication,  procured  or 
suffered  a  judgment  to  be  entered  against  himself  in 
favor  of  any  person  or  made  a  transfer  of  any  of  his 
property,  and  the  effect  of  the  enforcement  of  such 
judgment  or  transfer  will  be  to  enable  any  one  of  his 
creditors  to  obtain  a  greater  percentage  of  his  debt 
than  any  other  of  such  creditors  of  the  same  class. 
Where  the  preference  consists  in  a  transfer,  such 
period  of  four  months  shall  not  expire  until  four 
months  after  the  date  of  the  recording  or  registering 
of  the  transfer,  if  by  law  such  recording  or  regis- 
tering is  required. 

A  partnership  during  the  continuation  of  the 
partnership  business,  or  after  its  dissolution,  and 
before  the  final  settlement  thereof,  may  be  adjudged 
a  bankrupt. 

The  creditors  of  the  partnership  shall  appoint 
the  trustee;  in  other  respects  so  far  as  possible  the 
estate  shall  be  administered  as  herein  provided  for 
other  estates. 

The  court  of  bankruptcy  which  has  jurisdiction 
of  one  of  the  partners  may  have  jurisdiction  of  all 
the  partners  and  of  the  administration  of  the  part- 
nership and  individual  property. 

Section  124.    Duties  of  Bankrupts. 

The  duties  of  a  bankrupt  are  thus  set  out  in  th« 
statute: 


BANKRUPTCY  IST 

The  bankrupt  shall 

(1)  attend  the  first  meeting  of  his  creditors,  if 
directed  by  the  court  or  a  judge  thereof  to  do  so, 
and  the  hearing  upon  his  application  for  a  discharge, 
if  filed; 

(2)  comply  with  all  lawful  orders  of  the  court ; 

(3)  examine  the  correctness  of  all  proofs  of 
claims  filed  against  his  estate; 

(4)  execute  and  deliver  such  papers  as  shall  be 
ordered  by  the  court; 

(5)  execute  to  his  trustee  transfers  of  all  his 
property  in  foreign  countries ; 

(6)  immediately  inform  his  trustee  of  any  at- 
tempt, by  his  creditors  or  other  persons,  to  evade  the 
provisions  of  this  Act,  coming  to  his  knowledge; 

(7)  in  case  of  any  person  having  to  his  knowl- 
edge proved  a  false  claim  against  his  estate,  disclose 
that  fact  immediately  to  his  trustee; 

(8)  prepare,  make  oath  to,  and  file  in  court 
within  ten  days,  imless  further  time  is  granted,  after 
the  adjudication,  if  an  involuntary  bankrupt,  and 
with  the  petition,  if  a  voluntary  bankrupt,  a  sched- 
ule of  his  property,  showing  the  amount  and  kind  of 
property,  the  location  thereof,  its  money  value  in  de- 
tail, and  a  list  of  his  creditors,  showing  their  resi- 
dences, if  known,  if  unknown,  that  fact  to  be  stated, 
the  amounts  due  each  of  them,  the  consideration 
thereof,  the  security  held  by  them,  if  any,  and  a 
claim  for  such  exemptions  as  he  may  be  entitled  to, 
all  in  triplicate,  one  copy  of  each  for  the  clerk,  one 
for  the  referee,  and  one  for  the  trustee ;  and 

(9)  when  present  at  the  first  meeting  of  his 
creditors,  and  at  such  other  times  as  the  court  shall 


188  COMMERCIAL  LAW 

order,  submit  to  an  examination  concerning  the  con- 
ducting of  his  business,  the  cause  of  his  bankruptcy, 
his  dealings  with  his  creditoi-s  and  other  persons,  the 
amount,  kind,  and  whereabouts  of  his  property,  and, 
in  addition,  all  matters  which  may  affect  the  admin- 
istration and  settlement  of  his  estate;  but  no  testi- 
mony given  by  him  shall  be  offered  in  evidence 
against  him  in  any  criminal  proceeding. 

Provided,  however,  that  he  shall  not  be  required 
to  attend  a  meeting  of  his  creditors,  or  at  or  for  an 
examination  at  a  place  more  than  one  hundred  and 
fifty  miles  distant  from  his  home  or  principal  place 
of  business,  or  to  examine  claims,  except  when  pre- 
sented to  him,  unless  ordered  by  the  court,  or  a  judge 
thereof,  for  cause,  and  the  bankrupt  shall  be  paid 
his  actual  expenses  from  the  estate  when  examined 
or  required  to  attend  at  any  place  other  than  the 
city,  town  or  village  of  his  residence. 

Section  125.    Protection,  Detention,  Etc.,  of  Bank- 
rupt. 

A  bankrupt  is  exempt  from  arrest  upon  civil 
process  except  where  the  writ  is  issued  by  a  court 
of  bankruptcy  for  contempt  or  disobedience  of  its 
lawful  orders,  or  where  it  is  issued  by  a  State  court, 
having  proper  jurisdiction,  in  a  case  where  a  dis- 
charge in  bankruptcy  would  not  affect  the  cause  of 
action. 

When  the  Judge  in  a  bankruptcy  court  considers 
it  necessary  he  orders  the  detention  of  the  person 
of  the  bankrupt  in  order  to  compel  his  presence  to 
testify  in  the  bankruptcy  proceedings. 

Whenever  a  warrant  for  the  apprehension  of  a 


BANKEUPTCY  189 

bankrupt  shall  have  been  issued,  and  he  shall  have 
been  found  within  the  jurisdiction  of  a  court  other 
than  the  one  issuing  the  warrant,  he  may  be  extra- 
dited in  the  same  manner  in  which  persons  under 
indictment  are  now  extradited  from  one  district 
within  which  a  district  court  has  jui'isdiction  to 
another. 

A  suit  which  is  founded  upon  a  claim  from  which 
a  discharge  would  be  a  release,  and  which  is 
pending  against  a  person  at  the  time  of  the  filing  of 
a  petition  against  him,  shall  be  stayed  until  after 
an  adjudication  or  the  dismissal  of  the  petition;  if 
such  person  is  adjudged  a  bankrupt,  such  action 
may  be  further  stayed  until  twelve  months  after  the 
date  of  such  adjudication,  or,  if  within  that  time 
such  person  applies  for  a  discharge,  then  until  the 
question  of  such  discharge  is  determined. 

Proceedings  in  bankruptcy  are  not  abated  by 
the  death  or  insanity  of  the  bankrupt. 

Section  126.    Compositions. 

A  bankrupt  may  offer  terms  of  composition  to 
his  creditors  after,  but  not  before,  he  has  been  ex- 
amined in  open  court  or  at  a  meeting  of  his  creditors 
and  filed  in  court  the  schedule  of  his  property  and 
list  of  his  creditors,  required  to  be  filed  by  bankrupts. 

An  application  for  the  confirmation  of  a  com- 
position may  be  filed  in  the  court  of  bankruptcy 
after,  but  not  before,  it  has  been  accepted  in  writing 
by  a  majority  in  niunber  of  all  creditors  whose 
claims  have  been  allowed,  which  number  must  repre- 
sent a  majority  in  amount  of  such  claims,  and  the 
consideration  ito  be  paid  by  the  bankrupt  to  his 


190  COMMERCIAL  LAW 

creditors,  the  money  necessary  to  pay  all  debts 
which  have  priority  and  the  cost  of  the  proceedings, 
have  been  deposited  in  such  place  as  shall  be  desig- 
nated by  and  subject  the  order  of  the  judge. 

The  judge  shall  confirm  a  composition  if  satis- 
fied that : 

(1)  It  is  for  the  best  interests  of  the  creditors; 

(2)  The  bankrupt  has  not  been  guilty  of  any  of 
the  acts  or  failed  to  perform  any  of  the  duties  which 
would  be  a  bar  to  his  discharge ;  and 

(3)  The  offer  and  its  acceptance  are  in  good 
faith  and  have  not  been  made  or  procured  except 
as  herein  provided,  or  by  any  means,  promises,  or 
acts  herein  forbidden. 

Upon  the  confirmation  of  a  composition,  the  con- 
sideration shall  be  distributed  as  the  judge  shall 
direct,  and  the  case  dismissed.  Whenever  a  composi- 
tion is  not  confirmed,  the  estate  shall  be  administered 
in  bankruptcy  as  herein  provided. 

The  judge  may,  upon  the  application  of  parties 
in  interest  filed  at  any  time  within  six  months  after 
a  composition  has  been  confirmed,  set  the  same 
aside  and  reinstate  the  case  if  it  shall  be  made  to 
appear  upon  a  trial  that  fraud  was  practiced  in  the 
procuring  of  such  composition,  and  that  the  knowl- 
edge thereof  has  come  to  the  petitioners  since  the 
confirmation  of  such  composition. 
Section  127.    Liens  Dissolved  and  Conveyances  Set 

Aside  by  Bankruptcy  Proceedings. 

A  lien  created  by  or  obtained  in  or  pursuant  to 
any  suit  or  proceeding  at  law  or  in  equity,  including 
an  attachment  upon  mesne  process,  or  a  judgment 


BANKRUPTCY  191 

by  confession,  which  was  begun  against  a  person 
within  four  months  before  the  filing  of  a  petition  in 
bankruptcy  by  or  against  such  person  shall  be  dis- 
solved by  the  adjudication  of  such  person  to  be  a 
bankrupt  if: 

(1)  It  appears  that  said  lien  was  obtained  and 
permitted  while  the  defendant  was  insolvent  and 
that  its  existence  and  enforcement  will  work  a 
preference,  or 

(2)  The  party  or  parties  to  be  benefited  thereby 
had  reasonable  cause  to  believe  the  defendant  was 
insolvent  and  in  contemplation  of  bankruptcy,  or 

(3)  That  such  lien  was  sought  and  permitted  in 
fraud  of  the  provisions  of  this  Act ;  or  if  the  dissolu- 
tion of  such  lien  would  militate  against  the  best 
interests  of  the  estate  of  such  person  the  same  shall 
not  be  dissolved,  but  the  trustee  of  the  estate  of  such 
person,  for  the  benefit  of  the  estate,  shall  be  subro- 
gated to  the  rights  of  the  holder  of  such  lien  and 
empowered  to  perfect  and  enforce  the  same  in  his 
name  as  trustee  with  like  force  and  effect  as  such 
holder  might  have  done  had  not  bankruptcy  pro- 
ceedings intervened. 

Liens  given  or  accepted  in  good  faith  and  not  in 
contemplation  of  or  in  fraud  upon  this  Act,  and  for 
a  present  consideration,  which  have  been  recorded 
according  to  law,  if  record  thereof  was  necessary  in 
order  to  impart  notice,  shall  not  be  affected  by  this 
Act. 

That  all  conveyances,  transfers,  assignments,  or 
incumbrances  of  his  property,  or  any  part  thereof, 
made  or  given  by  a  person  adjudged  a  bankrupt 
under  the  provisions  of  this  Act  subsequent  to  the 


192  COMMERCIAL  LAW 

passage  of  this  Act  and  within  four  months  prior  to 
the  filing  of  the  petition,  with  the  intent  and  purpose 
of  his  part  to  hinder,  delay,  or  defraud  his  creditors, 
or  any  of  them  shall  be  null  and  void  as  against  the 
creditors  of  such  debtor,  except  as  to  purchasers  in 
good  faith  and  for  a  present  fair  consideration;  and 
all  property  of  the  debtor  conveyed,  transferred,  as- 
signed, or  encmnbered  as  aforesaid  shall,  if  he  be 
adjudged  a  bankrupt,  and  the  same  is  not  exempt 
from  execution  and  liability  for  debts  by  the  law  of 
his  domicile,  be  and  remain  a  part  of  the  assets  and 
estate  of  the  bankrupt  and  shall  pass  to  his  said 
trustee,  whose  duty  it  shall  be  to  recover  and  re- 
claim the  same  by  legal  proceedings,  or  otherwise 
for  the  benefit  of  the  creditors.  And  all  con- 
veyances, transfers,  or  incumbrances  of  his  property 
made  by  a  debtor  at  any  time  within  the  four  months 
prior  to  the  filing  of  the  petition  against  him,  and 
while  insolvent,  which  are  held  null  and  void  as 
against  the  creditors  of  such  debtor  by  the  laws 
of  the  State,  Territory,  or  District  in  which  such 
property  is  situate,  shall  be  deemed  null  and  void 
under  this  Act  against  the  creditors  of  such  debtor 
if  he  be  adjudged  a  bankrupt,  and  such  property 
shall  pass  to  the  assignee  and  be  by  him  reclaimed 
and  recovered  for  the  benefit  of  the  creditors  of  the 
bankrupt. 

That  all  levies,  judgments,  attachments,  or  other 
liens,  obtained  through  legal  proceedings  against  a 
person  who  is  insolvent,  at  any  time  within  four 
months  prior  to  the  filing  of  a  petition  in  bankruptcy 
against  him,  shall  be  deemed  null  and  void  in  case  he 
is  adjudged  a  bankrupt,  and  the  property  affected 


BANKRUPTCY  193 

by  the  levy,  judgment,  attachment,  or  other  lien 
shall  be  deemed  wholly  discharged  and  released  from 
the  same,  and  shall  pass  to  the  trustee  as  a  part  of 
the  estate  of  the  bankrupt,  unless  the  court  shall,  on 
due  notice,  order  that  the  right  under  such  levj^, 
judgment,  attachment,  or  other  lien  shall  be  pre- 
served for  the  benefit  of  the  estate;  and  thereupon 
the  same  msiy  pass  to  and  shall  be  preserved  by  the 
trustee  for  the  benefit  as  aforesaid. 

And  the  court  may  order  such  convej^ance  as 
shall  be  necessary  to  carry  the  purpose  of  this  sec- 
tion into  effect ; 

Provided,  That  nothing  herein  contained  shall 
have  the  effect  to  destroy  or  impair  the  title  obtained 
by  such  levy,  judgment,  attachment,  or  other  lien, 
of  a  bona  fide  purchaser  for  value  who  shall  have 
acquired  the  same  without  notice  or  reasonable 
cause  for  injury. 

Section  128.    Distribution  of  Bankrupt's  Estate. 

The  following  debts  of  a  bankrupt  may  be  proved 
and  allowed  against  his  estate; 

(1)  A  fixed  liability,  as  evidenced  by  a  judg- 
ment or  an  instrument  in  writing,  absolutely  owing 
at  the  time  of  the  filing  of  the  petition  against  him, 
whether  then  payable  or  not  within  any  interest 
thereon  which  would  have  been  recoverable  at  that 
date  or  with  a  rebate  of  interest  upon  such  as  were 
not  then  payable  and  did  not  bear  interest; 

(2)  Due  as  costs  taxable  against  an  involuntary 
bankrupt  who  was  at  the  time  of  the  filing  of  the 
petition  against  him  plaintiff  in  a  cause  of  action 

13 


194  COMMEECIAL  LAW 

which  would  pass  to  the  trustee  and  which  the 
trustee  declines  to  prosecute  after  notice; 

(3)  Founded  upon  a  claim  for  taxable  costs  in- 
curred in  good  faith  by  a  creditor  before  the  filing  of 
a  petition  (in)  an  action  to  recover  a  provable  debt ; 

(4)  Founded  upon  an  open  account,  or  upon  a 
contract  express  or  implied;  and 

(5)  Founded  upon  provable  debt  reduced  to 
judgment  after  the  filing  of  the  petition  and  before 
the  consideration  of  the  bankrupts  application  for  a 
discharge,  less  costs  incurred  and  interest  accrued 
after  the  filing  of  the  petition  and  up  to  the  time 
of  the  entry  of  such  judgments. 

Unliquidated  claims  against  the  bankrupt  may, 
pursuant  to  application  to  the  court,  be  liquidated 
in  such  manner  as  it  shall  direct,  and  may  thereafter 
be  proved  and  allowed  against  the  estate. 

The  debts  to  have  priority,  except  as  herein  pro- 
vided, and  to  be  paid  in  full  out  of  bankrupt  estates, 
and  the  order  of  payment  are  as  follows: 

(1)  The  actual  and  necessary  cost  of  preserving 
the  estate  subsequent  to  filing  the  petition; 

(2)  The  filing  fees  paid  by  creditors  in  involun- 
tary cases; 

(3)  The  costs  of  administration,  including  the 
fees  and  mileage  payable  to  witnesses  as  now  or 
hereafter  provided  by  the  laws  of  the  United  States, 
and  one  reasonable  attorney's  fee,  for  the  pro- 
fessional services  actually  rendered,  irrespective  of 
the  number  of  attorneys  employed  to  the  petitioning 
creditors  in  involuntary  cases,  to  the  bankrupt  in 
involuntary    cases    while    performing    the    duties 


BANKRTTPTCy  195 

herein  presciibed,  and  to  the  bankmpt  in  voluntary 
cases,  as  the  court  may  allow; 

(4)  Wages  due  to  workmen,  clerks,  or  servants 
which  have  been  earned  within  three  months  before 
the  date  of  the  commencement  of  proceedings,  not 
to  exceed  three  hundred  dollars  to  each  claimant; 
and 

(5)  Debts  owing  to  any  person  who  by  the  laws 
of  the  State  or  the  United  States  is  entitled  to 
priority. 

Dividends  shall  be  declared  and  paid  on  all 
allowed  claims  except  such  as  have  priority  or  are 
secured. 

The  first  dividend  shaU  be  declared  within  thirty 
days  after  the  adjudication,  if  the  money  of  the 
estate  in  excess  of  the  amount  necessary  to  pay  the 
debts  which  have  priority  and  such  claims  as  have 
not  been,  but  probably  will  be,  allowed  equals  five 
percentum  or  more  of  such  allowed  claims.  Divi- 
dends subsequent  to  the  first  shall  be  declared  upon 
like  terms  as  the  first  and  as  often  as  the  amount 
shall  equal  ten  percentum  or  more  and  upon  closing 
the  estate.  Dividends  may  be  declared  oftener  and 
in  smaller  proportions  if  the  judge  shall  so  order. 

The  rights  of  creditors  who  have  received  divi- 
dends, or  in  whose  favor  final  dividends  have  been 
declared,  shall  not  be  affected  by  the  proof  and 
allowance  of  claims  subsequent  to  the  date  of  such 
payment  or  dedarations  of  dividends;  but  the 
creditors  proving  and  secm-mg  the  allowance  of  such 
claims  shall  be  paid  dividends  equal  in  amount  to 
those  already  received  by  the  other  creditors  if  the 


196  COMMEECIAL  LAW 

estate  equals  so  much  before  such  other  creditors 
are  paid  any  further  dividends. 

Dividends  which  remain  unclaimed  for  six 
months  after  the  final  dividend  has  been  declared 
shall  be  paid  by  the  trustee  into  court. 

Dividends  remaiuing  unclaimed  for  one  year 
shall,  under  the  direction  of  the  court,  be  distributed 
to  the  creditors  whose  claims  have  been  allowed 
but  not  paid  in  full,  and  after  such  claims  have  been 
paid  in  full,  the  balance  shall  be  paid  to  the 
bankrupt : 

Provided,  That  in  case  unclaimed  dividends  be- 
long to  minors  such  minors  may  have  one  year  after 
arriving  at  majority  to  claim  such  dividends. 

Section  129.    Discharge  in  Bankruptcy. 

Any  person  may,  after  the  expiration  of  one 
month  and  within  the  next  twelve  months  subse- 
quent to  being  adjudged  a  bankrupt,  file  an  applica- 
tion for  a  discharge  in  the  court  of  bankruptcy  in 
which  the  proceedings  are  pending;  if  it  shall  be 
made  to  appear  to  the  judge  that  the  bankrupt  was 
unavoidably  prevented  from  filing  it  within  such 
time,  it  may  be  filed  within  but  not  after  the  expira- 
tion of  the  next  six  months. 

The  judge  shall  hear  the  application  for  a  dis- 
charge and  such  proofs  and  pleas  as  may  be  made 
in  opposition  thereto  by  parties  in  interest,  at  such 
time  as  will  give  parties  in  interest  a  reasonable  op- 
portunity to  be  fully  heard,  and  investigate  the 
merits  of  the  application  and  discharge  the  applicant 
unless  he  has: 


BANKRUPTCY  197 

(1)  Committed  an  offense  punishable  by  im- 
prisonment as  herein  provided;  or 

(2)  With  fraudulent  intent  to  conceal  his  true 
financial  condition  and  in  contemplation  of  bank- 
ruptcy, destroyed,  concealed,  or  failed  to  keep  books 
of  accounts  or  records  from  which  his  true  condition 
might  be  ascertained. 

The  judge  may,  upon  the  application  of  parties 
in  interest  who  have  not  been  guilty  of  undue  laches, 
filed  at  any  time  within  one  year  after  a  discharge 
shall  have  been  granted,  revoke  it  upon  a  trial  if  it 
shall  be  made  to  appear  that  it  was  obtained  through 
the  fraud  of  the  bankrupt,  and  that  the  knowledge 
of  the  fraud  to  the  petitioners  since  the  granting  of 
the  discharge,  and  that  the  actual  facts  did  not  war- 
rant the  discharge. 


CHAPTER  XV. 
THE  REGULATION  OF  COMMERCE/ 

Section  130.    The  Commerce  Clause  of  the  Federal 
Constitution. 

Clause  3:  (Congress  shall  have  power)  "To 
regulate  commerce  with  foreign  nations,  and  among 
the  several  States,  and  with  the  Indian  tribes." 

The  regulation  of  commerce  with  foreign  rela- 
tions is  intrusted  to  the  central  government  in  the 
United  States  by  the  Constitution.  The  absence  of 
this  power  in  the  central  government  under  the 
Articles  of  Confederation  constituted  one  of  the 
chief  sources  of  weakness  in  that  instrument. 
Scarcely  less  essential  to  the  harmony  and  existence 
of  the  United  States  was  the  placing  in  the  hands  of 
the  new  central  government  of  the  power  of  regu- 
lating commerce  between  the  several  States.  The 
absolute  necessity  of  such  control  had  been  shown 
by  the  controversies  between  the  different  States 
during  the  period  from  1783  to  1787.  The  power  of 
the  United  States  over  commerce  (except  that  con- 
fined within  the  limits  of  a  single  State)  was  made 
complete  by  the  Constitution  giving  to  it  the  regula- 
tion of  commerce  with  the  Indian  tribes. 

*This  chapter  is  taken  from  the  work  of  the  author  on  "United 
States  Constitutional  History  and  Law."  On  account  of  the  extreme 
importance  of  this  subject  at  the  present  time  it  has  been  treated  at  some 
length. 

199 


200  COMMEECIAL  LAW 

The  importance  of  this  power  of  Congress  over 
commerce,  and  more  particularly  over  interstate 
commerce,  has  greatly  increased  since  the  early  days 
of  the  Constitution. 

*'The  commerce  clause  of  the  federal  Constitu- 
tion presents  the  remarkable  instance  of  a  national 
power  which  was  comparatively  unimportant  for 
eighty  years,  and  which  in  the  last  thirty  years  has 
been  so  developed  that  it  is  now,  in  its  nationalizing 
tendency,  perhaps  the  most  important  and  conspic- 
uous power  possessed  by  the  Federal  Government. 

"The  fact  is  more  remarkable  because  the 
deficiency  in  the  Articles  of  Confederation  most  felt 
was  the  lack  of  this  very  power,  and  because  the 
Convention  which  framed  the  Federal  Constitution 
was  immediately  brought  about  by  the  recognized 
necessity  of  a  uniform  system  in  the  commercial 
regulations  of  the  several  States."^ 

Before  the  year  1840  the  construction  of  this 
clause  had  been  involved  in  but  five  cases  submitted 
to  the  Supreme  Court  of  the  United  States.  In  1860 
the  number  of  cases  in  that  court  involving  its  con- 
struction had  increased  to  twenty;  in  1870  the 
number  was  thirty;  by  1880  the  number  had  in- 
creased to  seventy-seven;  in  1890  the  number  had 
increased  to  one  hundred  and  forty-eight;  while  at 
the  present  time  it  is  over  two  hundred.  An  equall}' 
rapid  increase  is  to  be  seen  in  the  number  of  cases 
of  this  character  in  the  Supreme  Courts  of  the 
States  and  in  the  United  States  Circuit  Court  and 
District  Court.  Up  to  the  year  1840  this  clause  had 
been  involved  in  these  courts  in  forty-eight  cases, 

'♦'Commerce  Clause  of  the  Constitution,"  Prentice  and  Egan,  p.  1. 


THE  REGULATION  OF  COMMERCE  201 

by  1860  in  one  hundred  and  sixty-four,  by  1890  in 
eight  hundred,  and  by  the  close  of  the  nineteenth 
century  in  nearly  fifteen  hundred;  while  the  number 
of  cases  on  some  phrase  or  other  of  this  subject  is 
yearly  increasing.^ 

Congress  having  the  power  to  regulate  commerce, 
has  the  power  entirely  to  prohibit  it.  Congress  once 
imdertook  to  prohibit  foreign  commerce.  This  was 
in  1807,  when  the  Embargo  Act  was  passed  prohibit- 
ing commerce  with  all  foreign  coimtries;  the  Non- 
Intercourse  Act  of  1809  modified  this  so  that  it  only 
applied  to  commerce  with  France  and  England. 
These  acts  were  attacked  as  unconstitutional  on  the 
ground  that  their  object  was  to  destroy  commerce, 
not  to  regulate  it.  Their  constitutionality  was  up- 
held, however,  in  a  District  Court  of  the  United 
States,*  and  the  question  was  never  brought  before 
the  Supreme  Court.  That  Congress  has  such  power 
can  hardly  be  doubted.  The  power  to  regulate  is  un- 
limited, and  the  prohibition  of  commerce  is  but  one 
kind  of  regulation.  It  has  been  held  that  Congress 
can  prohibit  trade  with  the  Indians  unless  carried 
on  under  a  license,^  and  it  is  but  a  step  from  this 
point  to  the  prohibition  of  such  trade  altogether. 

The  power  to  regulate  foreign  and  interstate 
commerce  necessarily  involves  the  control  of  navi- 
gable waters  over  which  so  largo  a  portion  of  such 
commerce  must  go.  The  proposition  laid  down  in 
Gibbons  vs.  Ogden,  that  the  laws  of  Congress  regu- 
lating commerce  must  act  within  the  limits  of  the 

•  Id.,  pp.  14-15. 

•  United  States  va.  The  William,  American  Law  Journal,  25,  55. 

•  United  States  vb.  Cisha,  1  McLean,  254. 


202  COMMESCIAL  LAW 

individual  States,  carries  with  th«  eorollarj  that 
Congress  must  have  the  right  of  control  over  the 
great  highways  of  interstate  commerce  which  run 
through  the  States.  In  Pennsylvania  vs.  Wheeling 
Bridge  Company,**  it  was  held  that  the  Ohio  River, 
being  a  navigable  stream,  w^as  subject  to  the  control 
of  Congress,  and  that  therefore,  if  a  bridge  was  so 
erected  across  it  as  to  obstruct  navigation,  it  was  a 
nuisance,  and  that  an  act  of  the  legislature  of  Vir- 
ginia authorizing  its  construction,  afforded  no 
justification  to  the  bridge  company.  The  power  of 
Congress  to  regulate  commerce  comprehends  the 
control  for  that  purpose  of  all  the  navigable  waters 
of  the  United  States  which  are  accessible  from  a 
State  other  than  that  in  which  they  lie,  and  it  is  for 
Congress  to  determine  whether  its  full  powers  will 
be  brought  into  activity,  and  as  to  the  regulations 
it  will  provide."^  The  authority  of  the  United  States 
includes  not  only  the  power  to  improve  the  naviga- 
tion of  navigable  waters,^  but  also  to  regulate  their 
use  as  a  highway.^  Congress  may  authorize  the  erec- 
tion of  railroad  bridges  across  navigable  waters  for 
the  purpose  of  preventing  trammels  to  commerce 
across  the  States.^**  But  if  a  river  is  not,  of  itself, 
a  highway  of  commerce  with  other  States  or  foreign 
countries,  or  does  not  form  such  highway  by  its  con- 
nection with  other  waters,  and  is  only  navigable 

'  18  Howard,  435. 

^  Oilman  vs.  Philadelphia,  3  Wallace,  713.  See  also  Pennsylvania  vs. 
Wheeling,  etc.,  Bridge  Co.,  18  Howard,  421;  South  Carolina  vs.  Georgia, 
98  U.  S.,  4;  Miller  vs.  Mayor  of  New  York  Cuct.,  109  U.  S.,  385. 

» Wisconsin  vs.  Duluth,  96  U.  S.,  379. 

'Works  vs.  Junction  Ey.  Co.,  5  McLean,  425. 

^"Eailroad  Company  vs.  Eichmond,  119  Wallace,  589. 


THE  REGULATION  OF  COMMERCE  203 

between  different  places  within  the  State,  then  it  is 
not  a  navigable  water  of  the  United  States,  and  the 
act  of  Congress,  for  the  enrollment  and  license  of 
vessels  does  not  apply.^^  This  power  of  Congress  to 
regulate  commerce  gives  the  general  government 
authority  to  provide  for  the  punishment  of  crimes 
connected  with  such  commerce,^^  and  also  to  make 
laws  relative  to  maritime  torts/^ 

Section  131.    What  is  Commerce? 

Commerce,  of  course,  includes  the  purchase,  sale 
and  exchange  of  commodities/^  The  definition  of 
conmaerce  as  "an  exchange  of  commodities,"  is, 
however,  too  narrow.  Something  more  is  included 
in  the  term.  The  Supreme  Court  of  the  United 
States  has  always  given  a  liberal  interpretation  to 
the  meaning  of  the  word  commerce,  just  as  it  has 
given  a  broad  interpretation  to  the  power  of 
Congress  over  the  same.  In  the  famous  case  of  Gib- 
bons vs.  Ogden,  the  following  opinion  as  to  the  mean- 
ing of  the  word  commerce  is  to  be  found: 

"The  words  are:  'Congress  shall  have  power  to 
regulate  commerce  with  foreign  nations,  and  among 
the  several  States,  and  with  the  Indian  tribes.'  The 
subject  to  be  regulated  is  commerce;  and  our  Con- 
stitution being,  as  was  aptly  said  at  the  bar,  one  of 
enumeration,  and  not  of  definition,  to  ascertain  the 
extent  of  the  power,  it  becomes  necessary  to  settle 
the  meaning  of  the  word.    The  counsel  for  the  ap- 

"The  Montello,  11  Wallace,  411.  See  also  the  Daniel  Ball,  10  Wal- 
lace, 557. 

"  United  States  vs.  Coombs,  12  Peters,  72, 

'•Lord  vs.  Goodall  Steamship  Co..  102  U.  S.,  541. 

"Addyston  Pipe  etc.  Co.  vs.  U.  S.,  175  U.  S.,  241;  Gloucester  Ferry 
Co.  vs.  Pennsylvania,  114  U.  S.,  196-203. 


204  COMMEECIAL  LAW 

pellee  would  limit  it  to  trafi&c,  to  buying  and  selling, 
or  the  interchange  of  commodities,  and  do  not  admit 
that  it  comprehends  navigation.  This  would  restrict 
a  general  term,  applicable  to  many  objects,  to  one  of 
its  significations,  commerce,  undoubtedly,  is  traffic, 
but  it  is  something  more — it  is  intercourse.  It  de- 
scribed the  commercial  intercourse  between  nations, 
and  part  of  nations,  in  all  its  branches,  and  is  regu- 
lated by  prescribing  rules  for  carrying  on  that  inter- 
course. The  mind  can  scarcelj^  conceive  a  system 
for  regulating  commerce  between  nations  which 
shall  exclude  all  laws  concerning  navigation,  which 
shall  be  silent  on  the  admission  of  the  vessels  of  the 
one  nation  into  ports  of  the  other,  and  be  confined 
to  prescribing  rules  for  the  conduct  of  individuals, 
and  in  the  actual  employment  of  buying  and  selling, 
or  of  barter. 

If  commerce  does  not  include  navigation,  the 
government  of  the  Union  has  no  direct  power  over 
that  subject,  and  can  make  no  law  prescribing  what 
shall  constitute  American  vessels,  or  requiring  that 
they  shall  be  navigated  by  American  seamen.  Yet 
this  power  has  been  exercised  from  the  commence- 
ment of  the  government,  has  been  exercised  with  the 
consent  of  all,  and  has  been  understood  by  all  to  be 
a  commercial  regulation.  All  America  understands, 
and  has  uniformly  understood  the  word  'commerce,* 
to  comprehend  navigation.  It  was  so  understood, 
and  must  have  been  so  understood,  when  the  Consti- 
tution was  framed.  The  power  over  commerce,  in- 
cluding navigation,  was  one  of  the  primary  objects 
for  which  the  people  of  America  adopted  their 
government,  and  must  have  been  contemplated  in 


THE  EEGULATION  OF  COMMERCE  205 

forming  it.  The  convention  must  have  used  the 
word  in  that  sense  because  all  have  understood  it  in 
that  sense;  and  the  attempt  to  restrict  it  comes  too 
late. 

If  the  opinion  that  'commerce'  as  the  word  is 
used  in  the  Constitution  comprehends  navigation 
also,  requires  any  additional  confirmation,  that  addi- 
tional confirmation  is,  we  think,  furnished  by  the 
words  of  the  instrument  itself.  It  is  a  rule  of  con- 
struction, acknowledged  by  all,  that  the  exceptions 
from  a  power  mark  its  extent  for  it  would  be  absurd, 
as  well  as  useless,  to  expect  from  a  granted  power 
that  which  was  not  granted — that  which  the  words 
of  the  grant  could  not  comprehend.  If,  then,  there 
are  in  the  Constitution  plain  exceptions  from  the 
power  over  navigation,  plain  inhibitions  to  the 
exercise  of  that  power  in  a  particular  way,  it  is  a 
proof  that  those  who  made  these  exceptions,  and 
prescribed  these  inhibitions,  understood  the  power 
to  which  they  applied  as  being  granted. 

The  ninth  section  of  the  first  article  declares 
that  *no  preference  shall  be  given,  by  any  regulation 
of  commerce  or  revenue,  to  the  ports  of  one  State 
over  those  of  another.'  This  clause  cannot  be  under- 
stood as  applicable  to  those  laws  only  which  are 
passed  for  the  purpose  of  revenue,  because  it  is  ex- 
pressly applied  to  commercial  regulations,  and  the 
most  obvious  preference  which  can  be  given  one 
port  over  another,  in  regulating  commerce,  related 
to  navigation.  But  the  subsequent  part  of  the 
sentence  is  still  more  explicit.  It  is,  'nor  shall 
vessels  bound  to  or  from  any  State  be  obliged  to 


206  COMMERCIAL  LAW 

enter,  clear  or  -pay  duties  in  another.'  These  words 
have  a  direct  reference  to  navigation. 

The  universally  acknowledged  power  of  the 
government  to  impose  embargoes  must  also  be  con- 
sidered as  showing  that  all  America  is  united  in  that 
construction  which  comprehends  navigation  in  the 
word  'commerce.'  Gentlemen  have  said,  in  argu- 
ment, that  this  is  a  breach  of  the  war-making  power, 
and  that  an  embargo  is  an  instrument  of  war,  not  a 
regulation  of  trade.  That  it  may  be,  and  often  is, 
used  as  an  instrument  of  war,  cannot  be  denied.  An 
embargo  may  be  imposed  for  the  pm^ose  of  facilitat- 
ing the  equipment  or  manning  of  a  fleet,  or  for  the 
purpose  of  concealing  the  progress  of  an  expedition 
preparing  to  sail  from  a  particular  port.  In  these, 
and  in  similar  cases,  it  is  a  military  instrument,  and 
partakes  of  the  nature  of  war.  But  all  embargoes  are 
not  of  this  description.  They  are  sometimes  re- 
sorted to  without  a  view  to  war,  and  with  a  single 
view  to  commerce.  In  such  case  an  embargo  is  no 
more  a  war  measure  than  a  merchantman  is  a  ship 
of  war,  because  both  are  vessels  which  navigate  the 
ocean  with  sails  and  seamen." 

Transportation  not  only  is  commerce,  but  it  is 
the  essential  element  always  to  be  found  in  cases  of 
interstate  commerce.  Transportation  is  the  means 
by  which  commerce  is  carried  on;  without  trans- 
portation there  could  be  no  commerce  between 
nations  or  among  the  States. 

In  every  case  which  has  been  held  to  be  within 
the  Constitutional  grant  to  Congress  acirual  trans- 
portation, either  of  persons  or  property,  appears 


THE  REGULATION  OF  COMMERCE  20% 

to  be  the  characteristic  of  foreign  commerce  and  of 
commerce  among  the  States.  ^^ 

In  a  later  case  than  Gibbons  vs.  Ogden,  the 
Supreme  Court  said : 

"Transportation  for  others,  as  an  independent 
business,  is  commerce,  ii'respective  of  the  purpose  to 
sell  or  retain  the  goods  which  the  owner  may  enter- 
tain with  regard  to  them  after  they  shall  have  been 
delivered."  ^^ 

The  control  of  Congress  over  transportation  gives 
to  it  a  like  power  of  regulation  over  those  appliances 
or  instrumentalities  by  which  transportation  is 
effected.  The  early  cases  on  this  point  were  mainly 
concerned  with  regulations  affecting  steamboats,^' 
but  in  the  latter  case  it  has  mainly  been  railroads 
whose  regulation  was  attempted.^^  As  an  incident 
to  their  control  over  railroads,  it  has  been  held  that 
Congress  has  the  power  to  authorize  the  construction 
of  a  railroad,^®  or  to  grant  a  right  of  way  to  a 
railroad.^*^ 

Telegraph  lines  are  so  intimately  connected  with 
commerce  in  their  use,  that  theu*  regulation  is  held 
to  be  a  regulation  of  commerce,  and  as  such  to  be 

"Prentice  and  Egan's  Commerce  Clause  of  the  Federal  Constitution, 
citing  Steamship  Oo.  vs.  Pennsylvania,  122  U.  S.,  326-339;  Von  Hoist, 
Constitutional  Law  of  U.  S.,  p.  138;  United  States  vs.  E.  C.  Knight  Co., 
156  U.  S.,  1;  Philadelphia  etc.  S.  S.  Co.  vs.  Pennsylvania,  122  U.  S.,  339; 
Railroad  Oo.  vs.  Huscn,  96  U.  S.,  455-470. 

"  Hawley  vs.  Kansas  City  Southern  E.  Co.,  187  U.  S.,  619. 

"  See  GilDfcons  vs.  Ogden,  supra. 

"See  Eteading  E.  E.  Oo.  vs.  Pennsylvania,  15  Wallace,  2S4;  Chicago 
and  NorfcihweBtorn  E.  E.  Oo.  vs.  Fuller,  17-18  Wallace,  560-5G8. 

"Oalforaia  vs.  Cemfcral  Pacific  E.  Co.,  127  U.  S.,  l-3r». 

"•Cherokee  Nation  vs.  Southern  Kansas  R.  Co.,  135  U.  S.,  OH-642. 


208  COMMERCIAL  LAW 

within  the  power  of  Congress.^  ^  The  same  rule 
applies  to  telephone  lines  according  to  State  deci- 
sions, there  being  as  yet  no  Federal  adjudication  of 
the  question.-- 

The  handling  and  slaughtering  of  animals  is 
commerce.-^ 

In  their  regulation  of  commerce  Congress  has  the 
same  power  over  corporations  that  it  has  over 
individuals.^^  This  necessarily  results  from  the  fact 
that  the  United  States  Constitution  makes  no 
acknowledgment  of  corporations  as  artificial  per- 
sons, and  under  it  they  can  only  be  regarded,  at 
least  in  theory,  as  aggregations  of  individuals. 

The  power  to  regulate  commerce  includes  the 
power  to  declare  what  articles  are  legal  subjects  of 
commerce.^^ 

Section  132.     What  Commerce  Does  Not  Include. 

While  the  courts  have  given  a  very  broad  mean- 
ing to  the  term  commerce,  still  not  every  transaction 
involving  the  payment  of  money  is  commerce. 

Insm-ance  is  not  commerce.  This  subject  is  de- 
serving of  special  attention  here,  in  view  of  the 
present  agitation  for  the  national  regulation  of  in- 
surance companies.  The  only  ground  upon  which 
the  Federal  Government  could  assume  such  regula- 

*^Lelamp  vs.  Port  of  Mobile,  127  U.  S.,  640-645;  Western  Union  Tele- 
graph Co.  vs.  Games,  162  U.  S.,  634;  Western  Union  Telegraph  Co.  vg. 
Alabama  State  Bank  of  Alabama,  132  U.  S.,  473. 

==  Central  Union  Telegraph  Co.  vs.  State,  118  Ind.,  207. 

^  Hopkins  vs.  United  States,  171  U.  S.,  578. 

^Crutcher  vs.  Kentucky,  141  U.  S.,  57;  Paul  vs.  Virginia,  8  Wallace, 
162-168. 

'^  Bowman  vs.  Railway  Co.,  125  U.  S.,  465;  Leisy  vs.  Hardin,  135 
U.  S.,  100;  United  States  vs.  Papper,  98  Federal  Reporter,  427. 


THE  EEGULATIOX  OF  COMMEECE  209 

tion  would  be  as  a  regulation  of  commerce,  and  the 
decisions  of  the  United  States  Courts  have,  without 
exception,  held  that  insurance  is  not  commerce.  In 
the  leading  of  this  subject  Paul  vs.  Virginia,^^  Mr. 
Justice  Feld,  in  delivering  the  opinion  of  the  court 
said:  "Issuing  a  pohcy  of  insurance  is  not  a  tran- 
saction of  commerce.  The  policies  are  simple 
contracts  of  indemnity  against  loss  by  fire,  entered 
into  between  the  corporation,  and  the  insured,  for 
a  consideration  paid  by  the  latter.  These  contracts 
are  not  articles  of  commerce  in  any  proper  meaning 
of  the  word.  They  are  not  subjects  of  trade  and 
barter  offered  in  the  market  as  something  having 
an  existence  and  value  independent  of  the  parties 
to  them.  They  are  not  commodities  to  be  shipped  or 
forwarded  from  one  State  to  another,  and  then  put 
up  for  sale.  They  are  like  other  personal  contracts, 
between  parties  which  are  completed  by  their 
signature  and  the  transfer  of  the  consideration. 
Such  contracts  are  not  interstate  transactions, 
though  the  parties  may  be  domiciled  in  different 
States.  The  policies  do  not  take  effect— are  not 
executed  contracts — until  delivered  by  the  agent  in 
Virginia.  They  are  then  local  transactions  and  are 
governed  by  the  local  law.  They  do  not  constitute 
a  part  of  the  commerce  between  the  States  any  more 
than  a  contract  for  the  purchase  and  sale  of  goods 
in  Virginia  by  a  citizen  of  New  York  whilst  in  Vir- 
ginia would  constitute  a  portion  of  such  commerce."' 
In  the  Liverpool  and  London  Life  and  Fire  In- 
surance Company  vs.  Massachusetts,-^  the  court  re- 

*  8  Wallace,  182. 
"  10  Wallace,  566. 
14 


210  COMMERCIAL  LAW 

affirmed  the  decision  in  Paul  vs.  Virginia;  and  in 
Berry  vs.  Mobile  Life  Insui-ance  Company,^^  this 
doctrine  Avas  applied  to  life  insurance  contracts. 
This  last  case  also  decided  that  the  fact  that  the 
parties  were  domiciled  in  different  States  was  im- 
material. This  iDrinciple  that  insurance  is  not 
commerce  was  affirmed  by  the  Supreme  Court  for 
the  last  time  (to  date)  in  New  York  Life  Insurance 
Company  vs.  Cravens  ^^  decided  in  1900. 

The  United  States  Government  cannot  restrain 
a  State  fi'om  passing  such  insurance  regulations  as 
it  deems  proper,  or  even  from  discriminating  against 
foreign  insurance  companies.  A  statute  of  the  State 
of  New  York  provided  that  when  the  laws  of  the 
other  States  imposed  upon  insurance  companies  in- 
corporated under  the  laws  of  New  York  as  a  condi- 
tion to  their  doing  business  in  such  States,  greater 
burdens  than  were  imposed  by  the  laws  of  New  York 
upon  similar  companies  of  such  other  States  doing 
business  in  New  York,  then  the  same  burdens  should 
be  imposed  upon  the  companies  of  such  other  States 
imposed  upon  New  York  companies.  The  Supreme 
Court  decided  that  this  law  was  not  unconstitutional 
under  the  fourteenth  amendment  to  the  Constitution 
of  the  United  States,  providing  that  no  State  shall 
''deny  to  any  person  within  its  jurisdiction  the  equal 
protection  of  its  laws."  ^^ 

The  mere  production  and  manufacture  of  com- 
modities are  not  acts  of  commerce.     In  Kidd  vs. 
Pearson,^*  the  constitutionality  of  the  Iowa  law  pro- 
Tea.  Cas.  No.  1,  358. 
»  178  U.  S.,  401. 

»*Fire  Association  of  Philadelphia  vs.  New  York,  119  TJ.  S.,  110. 
« 128  U.  S.,  1. 


THE  REGULATION  OF  COMMERCE  211 

hibiting  the  manufacture  of  intoxicating  liquors 
within  the  limits  of  the  State  was  attacked,  on  the 
ground  that  as  the  whole  or  a  part  of  the  liquor 
produced  was  to  be  sent  out  of  the  State,  its  manu- 
factm-e  was  one  step  in  a  transaction  of  interstate 
commerce.  The  court  refused  to  take  this  view 
saying: 

**We  think  the  construction  contended  for  by 
plaintiff  in  eiTor  would  extend  the  words  of  the 
grant  to  Congress,  in  the  Constitution,  beyond  their 
obvious  import,  and  is  inconsistent  with  its  object 
and  scope.  The  language  of  the  grant  is :  'Congress 
shall  have  power  to  regulate  commerce  with  foreign 
nations  and  among  the  several  States,'  etc.  .  .  . 
The  words  are  used  without  any  veiled  or  obscure 
signification.  ...  No  distinction  is  more  popu- 
lar to  the  common  mind,  or  more  clearly  expressed 
in  economic  and  political  literature,  than  that 
between  manufacturers  and  commerce.  Manufac- 
ture is  transformation — the  fashioning  of  raw 
materials  into  a  change  of  form  for  use.  The 
functions  of  commerce  are  different.  The  buying 
and  selling  and  transportation  incidental  thereto 
constitute  commerce.'* 

A  contract  entered  into  for  the  erection  of  a 
factory  to  be  supervised  and  operated  by  the  officei^ 
of  a  foreign  corporation  is  not  a  transaction  of  inter- 
state commerce  in  the  constitutional  sense  merely 
because  of  the  fact  that  the  products  of  the  factory 
are  largely  sold  and  shipped  to  other  localities.^- 

But  where  the  contract  is  for  its  delivery  in  an- 

*^  Diamond  Glue  Co.  V8.  V.  a  Glue  Co.,  103  Fed.  Rep.  838,  affirmed 
187  U.  S.,  611. 


213  COMMERCIAL  LAW 

other  state,  the  transaction  is  one  of  interstate 
commerce,  although  the  vendor  may  have  also 
agreed  to  manufacture  it  in  order  to  fulfill  his  con- 
tract of  sale.^^  So,  also,  a  shipment  of  merchandise 
C.  0.  D.  from  one  State  into  another  constitutes 
interstate  commerce.^'' 

A  State  tax  on  money  or  exchange  brokers  is  not 
in  violation  of  the  powers  of  Congress.  This  is  true 
even  in  the  case  of  a  broker  who  deals  exclusively  in 
foreign  bills  of  exchange.  Foreign  bills  of  exchange 
are  instrimaents  of  commerce,  but  not  more  so  than 
are  the  products  of  agriculture  or  manufacturers, 
over  which  the  taxing  power  of  a  State  extends  until 
they  are  separated  from  the  general  mass  of 
property  by  becoming  exports.^^ 

The  power  of  the  United  States  oyer  commerce 
will  not  be  allowed  to  invalidate  State  laws  passed 
for  the  prevention  of  fraud.^® 

Section  133.    The  Power  of  the  States  Over  Inter- 
state Commerce. 

The  question  more  than  on  any  other  which  the 
respective  powers  of  the  Federal  and  State  govern- 
ments have  been  the  subject  of  litigation  has  been 
that  of  the  extent  of  the  authority  of  each  in  the 

"  Addyston  Pipe  etc.  Co.  vs.  United  States,  175  U.  S.,  246. 

**  American  Express  Co.  vs.  Iov?a,  196  U.  S.,  143,  reversing  118  Iowa, 
447. 

"  Nathan  vs.  Louisiana,  8  Howard,  73. 

"Plumbey  vs.  Massachusetts,  155  U.  S.,  461.  This  was  an  oleo- 
margarine case,  and  the  decision  has  been  criticised  as  being  opposed  to 
the  doctrine  as  laid  down  in  Leisy  vs.  Hardin,  and  as  resting  upon 
discrimination  rather  than  law.  For  other  oleomargarine  cases  see 
Schallenbeiger  vs.  Pennsylvania,  171  U.  S.,  1;  Collins  vs.  New  Hampshire, 
121  U.  S.,  30;  Powell  vs.  Pennsylvania,  127  U.  S.,  678. 


THE  REGULATION  OF  COMMERCE  213 

regulation  of  commerce.  The  famous  commerce 
clause  of  the  Constitution  gives  Congress  the  power; 
**To  regulate  commerce  with  foreign  nations  and 
among  the  several  States,  and  with  the  Indian 
tribes.""  This  provision  has  never  been  held  to 
entirely  prohibit  the  States  from  making  any  com- 
mercial regulations.  The  right  of  the  States  to 
completely  regulate  all  commerce  confined  within  its 
own  limits  is  now  being  disputed.  On  the  other 
hand,  it  has  been  conceded  that  the  power  of  Con- 
gress over  interstate  commerce  is  supreme.  The 
doubtful  border  line  has  been  created  by  the  question 
whether  the  States  could  in  any  instance  legislate 
on  questions  of  interstate  commerce,  if  such  legisla- 
tion did  not  conflict  with  any  Federal  statute. 

Section  134.    Gibbons  vs.  Ogden. 

Gibbons  vs.  Ogden,^^  was  the  first  case  to  come 
before  the  Supreme  Court  of  the  United  States 
which  involved  this  question,  whether  the  power 
over  interstate  commerce  was  exclusive  or  only  con- 
current. This  case  grew  out  of  the  action  of  the 
Legislature  of  the  State  of  New  York  in  granting  to 
Robert  L.  Livingston  and  Robert  Fulton  the  ex- 
clusive right  of  navigation  in  all  the  waters  within 
the  jurisdiction  of  the  State,  with  boats  moved  by 
fire  and  steam,  and  authorizing  the  courts  of  the 
State  to  award  an  injunction  to  restrain  any  other 
person  whatever  for  navigating  such  waters  with 
boats  of  this  description.  This  act  was  assailed  by 
the  appellant  in  the  case  as  unconstitutional,  as  being 

"  United  States  Constitution,  Article  1,  Section  8,  Clause  3. 
"  9  Wheaton,  1,  decided  1824. 


314  COMMERCIAL  LAW 

in  violation  of  the  power  of  Congress  over  the  inter- 
state commerce.  The  decision  of  the  particular 
question  involved  in  this  case  was  not  a  difficult  one. 
In  spite  of  the  decision  of  the  highest  court  of  the 
State  of  New  York,  awarding  the  injunction  asked 
against  the  infringement  of  this  monopoly,  it  was 
very  evident  that  if  a  State  could  pass  laws  of  this 
character,  the  control  of  Congress  over  interstate 
commerce  was  a  myth.  The  Supreme  Cornet  decided 
that  the  act  of  the  State  of  Xew  York  was  unconsti- 
tutional as  infringing  the  power  of  Congress  over 
interstate  commerce.  The  simplicity  of  the  decision 
of  the  point  at  issue  in  the  case  seems  to  have 
encouraged  the  court  to  lay  down  a  sweeping 
generalization  on  the  supremacy  of  Congress  over 
all  cases  of  interstate  commerce.  In  their  dicta  in 
this  case  the  Supreme  Court  took  a  position  which 
after  occasioning  trouble  to  the  Supreme  Court  in 
later  cases  had  finally  to  be  abandoned.  The  gen- 
eral principle  here  laid  down  was  that  the  power  of 
Congress  over  interstate  commerce  was  not  only 
supreme,  but  exclusive,  and  that  any  State  legisla- 
tion on  the  subject,  even  if  only  refeiTing  to  points 
which  had  not  been  legislated  upon  by  Congress, 
was  therefore  an  infringement  of  the  powers  of 
Congress  and  unconstitutional. 

Section  135.    Later  Cases. 

The  position  taken  in  Gibbons  vs.  Ogden  was 
soon  reiterated  in  the  case  of  Brown  vs.  Maryland,^ ^ 
which  decision  involved  the  constitutionality  of  a 
statute  of  the  State  of  Maryland  imposing  a  license 

••  12  Wheaton,  419,  decided  1827. 


THE  EEGULATION  OF  COMMERCE  215 

tax  upon  importers  for  the  privilege  of  selling  im- 
ported goods.  The  Supreme  Court  decided  this 
statute  to  be  unconstitutional,  as  violating  two 
provisions  in  the  Constitution,  (1)  that  clause  which 
declared  that  "no  State  shall,  without  the  consent  of 
Congress,  lay  any  imposts,  or  duties  on  imports  or 
exports,  except  what  may  be  absolutely  necessary 
for  executing  its  inspection  laws."  (2)  the  clause 
giving  Congress  power  over  interstate  commerce. 
The  decision  in  this  case  is  partially  based  upon  the 
assumed  fact  that  the  commercial  power  is  exclu- 
sivel}^  in  Congress,  even  in  cases  where  Congress  had 
failed  to  exercise  this  power  by  legislating  on  the 
subject  in  question. 

Only  two  years  after  the  decision  of  Brown  vs. 
Maryland,  a  case  was  presented  to  the  Supreme 
Court  which  compelled  that  body  to  render  a  decision 
which  cannot  be  harmonized  with  the  dicta  in  Gib- 
bons vs.  Ogden.  This  case,  of  Willson  vs.  Blackbird 
Creek  Marsh  Company ,^^  involved  the  validity  of  a 
law  of  Delaware,  authorizing  the  erection  of  a  dam 
across  Blackbird  Creek,  a  small  stream  entirely 
within  the  territorial  limits  of  the  State  of  Delaware. 
There  w^as  no  act  of  Congress  which  related  to  the 
subject.  Chief  Justice  Marshall  in  the  coiu^se  of  his 
decision  said :  "If  Congress  had  passed  an  act  which 
bore  upon  the  case,  any  act  in  execution  of  the  power 
to  regulate  commerce  the  object  of  which  was  to 
control  State  legislation  over  those  small  navigable 
creeks  into  which  the  tide  flows  and  which  abound 
throughout  the  lower  country  of  the  middle  and 
southern  states,  we  should  feel  not  much  difficulty 

«» 2  Peters,  245,  decided  1829. 


216  COMMERCIAL  LAW 

in  saying  that  a  State  law  coming  in  conflict  with 
such  act  would  be  void.  But  Congress  has  passed 
no  such  act.  The  repugnancy  of  the  law  of  Delaware 
to  the  Constitution  is  placed  entirely  on  its  re- 
pugnancy to  the  power  to  regulate  commerce  with 
the  foreign  nations  and  among  the  several  States; 
a  power  which  has  not  been  so  exercised  as  to  affect 
the  question. 

"We  do  not  think  that  the  act  empowering  the 
Blackbird  Creek  Marsh  Company  to  place  a  dam 
across  the  creek  can,  under  all  the  circumstances  of 
the  case,  be  considered  as  repugnant  to  the  power 
to  regulate  commerce  in  its  dormant  state,  or  as 
being  in  conflict  with  any  law  passed  on  the  subject." 

The  effect  of  this  decision  upon  that  in  Gibbons 
vs.  Ogden  has  been  the  occasion  of  much  dispute. 
No  reference  is  made  in  the  latter  decision  to  the 
former  one,  and  the  presumption  would  seem  to  be 
that  the  court  had  in  no  wise  changed  its  opinion  as 
to  the  law  decided  in  the  former  case  and  intended 
to  leave  it  in  full  force.  It  is  nevertheless  evident 
that  the  decision  in  Gibbons  vs.  Ogden  was  broad 
enough  to  have  justified  the  court  in  holding  the 
Delaware  statute  unconstitutional  in  Willson  vs. 
Blackbird  Creek  Marsh  Company.  The  coiu-t,  how- 
ever, seems  to  have  thought,  as  is  undoubtedly 
the  case,  that  there  was  a  great  distinction  between 
such  a  regulation  of  commerce  as  was  involved  in 
Gibbons  vs.  Ogden  and  that  in  issue  in  Willson  vs. 
blackbird  Creek  Marsh  Company.  The  court,  how- 
ever, was  not  at  this  time  able  to  enunciate  any  gen- 
eral statement  which  could  differentiate  the  class  of 
cases    .where     State     regulation    was     absolutely 


THE  EEGULATION  OF  COMMERCE  217 

prohibited  by  the  Constitution,  and  those  cases 
where  it  might  be  exercised  except  where  it  con- 
flicted with  the  regulations  created  by  Congress. 
The  later  decision,  therefore,  left  the  law  in  a  most 
unsatisfactory  condition.  The  decision  proved  to  be 
too  broad,  but  no  attempt  was  made  to  reduce  it  to 
its  proper  limits.  The  decision  in  the  case  of  New 
York  vs.  Miln*^  also  failed  to  establish  any  satis- 
factory working  rule.  The  question  here  involved 
was  the  constitutionality  of  any  act  of  the  State  of 
New  York  requiring  masters  of  all  passenger  vessels 
from  other  States  or  foreign  countries  to  make  a 
report  to  the  State  authorities  within  twenty-four 
hours  after  their  vessels  had  arrived,  giving  certain 
specified  information  as  to  the  passengers  carried  on 
the  vessels  during  the  voyage  just  completed.  The 
correctness  of  the  general  principles  contained  in  the 
decision  in  Gibbons  vs.  Ogden  was  discussed  by  the 
attorneys  for  both  sides  in  the  arguments.  The 
court,  however,  again  evaded  the  fundamental  prin- 
ciple involved  and  decided  in  favor  of  the  constitu- 
tionality of  the  law  of  New  York,  on  the  ground  that 
it  was  merely  an  exercise  of  police  power,  and  not  a 
regulation  of  commerce.  A  dissenting  opinion  in 
this  case  is  based  upon  the  dicta  in  Gibbons  vs. 
Ogden. 

The  confusion  as  to  the  true  law  of  this  point 
was  only  increased  hj  the  decision  in  the  License 
Cases,"*^  where  such  difference  of  opinion  became 
manifested  among  the  judges  that  six  out  of  the 
seven    members    of    the    Supreme    Court    wrote 

« 11  Peters,  102. 
*■  5  Ho-ward,  504. 


218  COMMEECIAL  LAW 

opinions.  The  License  Cases  consisted  of  the  three 
cases  of  Thurlow  vs.  The  Commonwealth  of  Massa- 
chusetts, Fletcher  vs.  The  State  of  Rhode  Island, 
and  Pierce  et  al  vs.  The  State  of  New  Hamx^shire, 
w^hich  were  argued  together.  The  fii'st  two  named 
cases  arose  upon  State  laws  passed  for  the  purpose 
of  discouraging  the  use  of  ardent  spirits  within  their 
respective  territories,  by  prohibiting  their  sale  in 
small  quantities  and  without  licenses  previously  ob- 
tained from  the  State  authorities.  The  validity  of 
the  law  of  each  State  was  attacked  upon  the  ground 
that  it  was  repugnant  to  that  clause  of  the  United 
States  Constitution  which  confers  upon  Congress 
the  power  to  regulate  commerce  with  foreign  nations 
and  among  the  several  States.  In  the  New  Hamp- 
shire case  there  was  a  State  law  which  prohibited 
the  sale  of  distilled  spirits  in  any  quantity  without 
a  License  from  the  selectmen  of  the  town  in  which 
the  party  resided.  The  plaintiffs  in  error,  who  were 
merchants  in  Dover,  in  New  Hampsliire,  purchased 
a  barrel  of  gin  in  Boston,  brought  it  to  Dover,  and 
sold  it  in  the  cask  in  which  it  was  imported,  without 
a  license  from  the  selectmen  of  the  town.  For  this 
sale  they  were  indicted,  convicted  and  fined  under 
the  law  above  mentioned. 

The  constitutionality  of  all  the  State  laws  in- 
volved was  upheld,  but  the  reasoning  and  dicta  con- 
tained in  the  opinion  of  the  various  judges,  especially 
as  to  the  New  Hampshire  case,  were  antagonistic  to 
each  other  in  an  extreme  degree.  Three  of  the 
judges,  including  the  Chief  Justice,^^  acknowledged 
that  the  law  of  New  Hampshire  was  a  regulation  of 

42  Taney,  Catron  and  Nelson. 


THE  EEGULATIOX  OF  COMMERCE  219 

interstate  commerce,  but  lield  it  to  be  valid,  as  it  did 
not  conflict  with  any  United  States  statute,  and  then 
attempted  the  hopeless  task  of  reconciling  this 
opinion  with  the  decision  in  Gibbons  vs.  Ogden. 
Justice  Grier  stood  forth  as  the  extreme  exponent 
of  the  states  rights  doctrine  by  holding  that  the 
police  power  of  the  State  was  paramount  over  the 
power  of  Congress  to  regulate  interstate  conmierce. 
Another  judge  ^^  held  that  the  right  to  import  did 
not  include  the  right  to  sell.  Justice  Woodbmy 
took  a  position  very  similar  to  that  afterward  laid 
down  in  the  case  of  Cooley  vs.  AYardens  of  the 
Port;  in  his  decision  he  distinguished  between  those 
regulations  of  commerce  which  required  uniformity 
of  application  throughout  the  country  and  that  other 
class  of  regulations  which  were  of  only  local  aiDplica- 
tion  or  importance,  holding  that  the  control  of 
Congress  over  the  former  was  exclusive,  while  as 
regards  the  latter  State  regulations  might  be  per- 
mitted so  long  as  they  did  not  conflict  with  the 
Federal  legislation.  Justice  McLain  was  the  only 
judge  who  in  this  case  asserted  in  his  opinion  the 
doctrine  of  Gibbons  vs.  Ogden. 

This  doctrine,  however,  was  again  upheld  by  a 
majority  of  the  coiu't  in  the  Passenger  Cases."^ 
These  cases  involved  the  constitutionality  of  laws 
passed  by  the  States  of  New  York  and  Massa- 
chusetts imposing  a  tax  upon  all  passengers  arriving 
from  other  States  or  foreign  countries,  the  proceeds 
of  which  taxes  were  to  go,  first,  to  pay  the  State 

**  Justice  Daniel. 

*■  7  Howard.  28.3,  decided  1848.  The  "Passenger  Cases"  included  the 
eascB  of  Smith  vs.  Turner  and  Morris  vs.  Boston. 


220  COMMEECIAL  LAW 

expenses  of  executing  its  police  laws  excluding 
paupers  and  convicts,  and  the  surplus,  if  any,  to  be 
applied  to  the  general  expenses  of  the  State.  Jus- 
tice Woodbury  in  a  dissenting  opinion  reiterated  the 
distinction  drawn  by  him  in  the  license  cases.  Three 
other  judges  also  dissented  from  the  opinion  of  the 
court. 

The  modern  rule  on  this  question  received  the 
sanction  of  the  court  for  the  first  time  in  Cooley  vs. 
Wardens  of  the  Port,**^  although  it  had  been  antici- 
pated by  Mr.  Justice  Woodbury  in  his  opinions  in 
the  License  Cases  and  the  Passenger  Cases.  The 
Statute  whose  constitutionality  was  involved  in 
Cooley  vs.  Wardens  of  the  Port  was  one  of  the  State 
of  Pennsylvania  regulating  the  employment  of  pilots 
in  the  port  of  Philadelphia.  In  their  decision  in  this 
case  the  judges  of  the  Supreme  Court  distinguished 
between  regulations  of  commerce  in  which  uni- 
formity throughout  the  United  States  is  deskable 
and  those  other  regulations  which,  being  local  in 
their  nature,  may  properly  admit  of  variations  in 
different  places  to  meet  varying  local  conditions. 
As  to  the  first  class  of  regulations,  the  court  affirmed 
the  rule  in  Gibbons  vs.  Ogden;  as  to  the  second 
class,  it  held  that  in  the  absence  of  Federal  statutes 
the  different  States  might  legislate  for  their  own 
territory.  While  the  power  of  Congress  was  still 
held  supreme  in  all  cases,  it  was  only  exclusive  in 
those  of  the  first  class.  Mr.  Justice  Curtis,  in  deliv- 
ering the  opinion  of  the  court,  said  in  part:  **When 
the  nature  of  a  power  like  this  is  spoken  of,  when  it 
is  said  that  the  nature  of  the  power  requires  that  it 

*•  12  Howard,  299,  decided  1851. 


THE  EEGULATION  OF  COMMERCE  231 

should  be  exercised  exclusively  by  Congress,  it  must 
be  intended  to  refer  to  the  subjects  of  that  power, 
and  to  say  they  are  of  such  a  nature  as  to  require 
exclusive  legislation  by  Congress.  Now,  the  power 
to  regulate  commerce  embraces  a  vast  field,  con- 
taining not  only  many  but  exceedingly  various  sub- 
jects, unlike  in  their  nature;  some  imperatively 
demanding  a  single  uniform  rule,  operating  equally 
on  the  commerce  of  the  United  States  in  every  port; 
and  some,  like  the  subject  now  in  question,  as  im- 
peratively demanding  that  diversity  which  alone 
can  meet  the  local  necessities  of  navigation.  Either 
absolutely  to  affirm  or  deny  that  the  nature  of  this 
power  requires  exclusive  legislation  by  Congress  is 
to  lose  sight  of  the  nature  of  the  subject  of  this 
power,  and  to  assert  concerning  all  of  them  is  really 
applicable  to  a  part." 

Although  for  more  than  a  half  a  century  the 
case  of  Cooley  vs.  Wardens  of  the  Port  has  been 
recognized  as  containing  the  correct  principle  as  to 
the  respective  powers  of  the  State  and  Federal 
governments,  the  application  of  the  rule  has  often 
been  a  matter  of  difficulty.  No  clear-cut  line  of 
demarcation  divides  the  two  classes  of  cases,  and  it 
is  not  always  easy  to  decide  whether  a  certain  com- 
mercial regulation  is  general  or  local  in  its 
character.  The  courts  have  been  compelled  to 
decide  each  case  which  came  before  them  on  its  own 
particular  state  of  facts. 

In  County  of  Mobile  vs.  Kimball*^  it  was  held 
that  the  improvement  of  harbors,  bays  and  navigable 
rivers  within  the  States  may  be  regulated  by  State 

"  102  U.  8.,  691. 


222  COMMERCIAL  LAW 

authority,  if  such  regulation  does  not  impair  their 
navigation  as  permitted  under  the  laws  of  the  United 
States  nor  defeat  any  system  for  the  improvement  of 
their  navigation  provided  by  the  general  govern- 
ment. The  court  in  this  decision  thus  comments  on 
the  principle  involved:  *'The  uniformity  of  com- 
mercial regulations  which  the  grant  to  Congress  was 
designed  to  secure  is  only  for  cases  where  such  uni- 
formity is  practical.  Where,  from  its  natm^e  or  the 
sphere  of  its  operation,  the  subject  is  local  and 
limited,  special  regulations  adapted  to  the  imme- 
diate locality  could  only  have  been  contemplated. 
State  action  upon  such  subjects  can  constitute  no 
interference  with  the  commercial  power  of  Congress, 
for  what  that  acts  the  State  authority  is  superseded. 
Inaction  of  Congress  upon  these  subjects  of  a  local 
nature  or  operation  unlike  its  inaction  upon  matters 
affecting  all  the  States  and  requiring  uniformity  of 
regulation,  is  not  to  be  taken  as  a  declaration  that 
nothing  shall  be  done  with  respect  to  them,  but  is 
rather  to  be  deemed  a  declaration  that  for  the  time 
being,  and  until  it  sees  fit  to  act,  they  may  be  regu- 
lated by  State  authorit}^" 

This  decision  is  sometimes  referred  to  as  deciding 
that  one  test  of  the  constitutionality  of  a  State  law 
on  the  subject  of  commerce  is  whether  it  would 
result  in  discrimination.^^  Such  a  deduction  from 
this  decision  is,  however,  unwarranted.  That  the 
absence  of  any  discrimination  between  local  and 
interstate  commerce  is  not  alone  sufficient  to  render 
a  State  law  constitutional  is  shown  by  the  decision  in 

**See  Prentice  and  Egan,  "Commerce  Clause  of  the  Federal  Coniti- 
tution,"  30. 


THE  KEGULATION  OF  COMMERCE  323 

the  case  of  the  State  freight  tax/®  This  decision  in- 
volved the  constitutionality  of  a  law  of  the  State 
of  Pennsj'lvania  which  laid  a  tax  on  every  ton  of 
freight  carried  within  the  limits  of  the  State.  The 
tax  fell  both  on  that  commerce  which  was  strictly 
local  and  that  which  was  interstate  in  its  character; 
but  in  spite  of  this  lack  of  discrimination  the  law 
was  held  to  be  an  unconstitutional  interference  with 
interstate  commerce. 

Several  of  the  important  decisions  of  the 
Supreme  Court  on  this  question  of  the  extent  to 
which  states  may  properly  be  allowed  to  regulate 
commerce  have  been  concerned  with  the  famous 
original  package  rule.  The  first  case  involving  the 
application  of  this  principle  was  that  of  Brown  vs. 
Maryland,^*^  decided  in  1827  and  already  referred 
to  in  this  chapter.  In  the  decision  in  this  case  it 
was  held  that  as  sale  is  the  object  of  importation, 
the  importation  of  goods  for  sale  w^as  not  complete 
until  the  goods  had  been  sold,  and  that  an  article 
could  not  be  considered  as  incorporated  with  the 
general  mass  of  property  of  the  State  while  it  still 
remained  in  its  original  package  in  the  hands  of  the 
importer.  Forty  years  later  this  rule  was  modified 
by  the  decision  in  the  case  of  Woodruff  vs.  Parban.^^ 
in  which  the  Supreme  Court  held  that  this  rule 
should  only  be  applied  in  the  case  of  goods  imported 
from  foreign  countries  and  not  to  goods  merely  im- 
ported into  one  State  from  another  State.  This 
modified  rule  was  followed  by  the  court  in  the  cases 

"  15  Wallace  232. 
"•  12  Wheaton  419. 
"  8  Wallace  ISS. 


224  COMMERCIAL  LAW 

of  Brown  vs.  Houston,^^  and  Robbins  vs.  Taxing  Dis- 
trict.^^  In  the  still  more  recent  cases,  however,  of 
Bowman  vs.  The  Northwestern  Railroad,^*  and 
Leisy  vs.  Hardin,^^  the  Supreme  Coiu't,  although  in 
each  case  by  a  divided  vote,  returned  to  the  doctrine 
as  laid  down  in  Brown  vs.  Maryland. 

This  last  mentioned  case  grew  out  of  the  prohibi- 
tion law  of  the  State  of  Iowa.  Certain  citizens  of 
Illinois,  in  disregard  of  this  law,  shipped  beer  into 
Iowa,  and  upon  its  seizure  by  officers  of  the  law, 
brought  an  action  of  replevin  to  recover  it.  A  judg- 
ment by  the  Supreme  Court  of  Iowa  in  favor  of  the 
defendants  was  overruled  by  the  Supreme  Court  of 
the  United  States,  which  held  that  the  right  of 
Congress  to  provide  for  the  interchange  of  com- 
modities between  the  States  involved  the  control 
over  such  commerce  until  the  commodities  were  in- 
corporated into  the  general  mass  of  property  of  the 
State  (thus  deciding  as  to  interstate  commerce  what 
Brown  vs.  Marjdand  decided  as  to  foreign  com- 
merce); that  while  any  State  under  its  general 
police  powers  had  the  right  to  provide  for  the  se- 
curity of  the  lives,  limbs,  health  and  comfort  of 
persons  and  the  protection  of  property,  so  situated, 
yet  a  subject  matter  which  has  been  confided  ex- 
clusively to  Congress  by  the  Constitution  is  not 
within  the  jurisdiction  of  the  police  powers  of  the 
State  unless  placed  there  by  congressional  action, 
and  that,  therefore,  as  beer  was  a  generally  recog- 

«114  U.  S.,  632,  decided  in  1885. 
"'  120  XJ.  S.,  489,  decided  in  1886. 
"  125  U.  S.,  465,  decided  in  1887. 
'"  135  U.  S.,  100,  decided  in  1890. 


THE  REGULATION  OF  COMMEKCE  235 

nized  article  of  commerce,  no  State  could  prohibit 
its  importation,  or  its  sale  in  the  original  packages 
in  which  it  was  imported.  The  opinion  closed  with 
the  following  paragraph: 

''Whatever  our  individual  views  may  be  as  to  the 
deleterious  or  dangerous  qualities  of  particular 
articles,  we  cannot  hold  that  any  articles  which 
Congress  recognizes  as  subjects  of  interstate  com- 
merce are  not  such,  or  that  whatever  are  thus 
recognized  can  be  controlled  by  State  laws  amount- 
ing to  regulations,  while  they  retain  that  character, 
although,  at  the  same  time,  if  directly  dangerous  in 
themselves  the  State  may  take  appropriate  measures 
to  guard  against  injury  before  it  obtains  complete 
jurisdiction  over  them.  To  concede  to  a  StaT;e  the 
power  to  exclude,  directly  or  indirectly,  articles  so 
situated,  without  congressional  permission,  is  to 
concede  to  a  majority  of  the  people  of  a  State,  repre- 
sented in  the  State  Legislature,  the  power  to  regulate 
commercial  intercourse  between  the  States,  by  de- 
termining what  shall  be  its  subjects,  when  that 
power  was  distinctly  granted  to  be  exercised  by  the 
people  of  the  United  States,  represented  in  Congress, 
and  its  possession  by  the  latter  was  considered  es- 
sential to  that  more  perfect  imion  which  the  consti- 
tution was  adopted  to  create.  Undoubtedly  there  is 
difficulty  in  drawing  the  line  between  the  municipal 
powers  of  the  one  government  and  the  commercial 
powers  of  the  other,  but  when  that  lino  is  determined 
in  the  particular  instance,  aocommodation  to  it, 
without  seiious  inconvenience,  may  readily  be  foimd 
to  use  the  language  of  IVIr.  Justice  Johnson  in  Gib- 
bons vs.  Ogden,  22  US.  8  Wheat.  1,248  (1,23,80),  'in 

IS 


226  COMMERCIAL  LAW 

a  frank  and  candid  co-operation  for  the  general 
good.'  " 

However  sound  the  doctrine  in  Leisy  vs.  Hardin 
may  have  been,  the  inconveniences  of  its  application 
were  so  great  as  to  induce  Congress  to  alleviate  them 
by  the  passage  of  the  Wilson  Act  of  Congress  of 
August  8, 1890,  which  provided, ' '  That  all  fermented, 
distilled  or  other  intoxicating  liquors  or  liquids 
transported  into  any  State  or  Territory  or  remain- 
ing therein  for  use,  consumption,  sale  or  storage 
therein,  shall  upon  arrival  in  such  State  or  Terri- 
tory be  subject  to  the  operation  and  effect  of  the  law 
of  such  State  or  Territory  enacted  in  the  exercise 
of  its  police  powers,  to  the  same  extent  and  in  the 
same  manner  as  though  such  liquors  and  liquids  had 
been  produced  in  such  State  or  Territory,  and  shall 
not  be  exempt  therefrom  by  reason  of  being  intro- 
duced therein  in  original  packages  or  otherwise." 

In  re  Rahrer  identically  the  same  question  as 
had  come  in  Leisy  vs.  Hardin  was  before  the  court, 
except  that  the  Wilson  Act  had  been  passed  in  the 
meantime.  The  com"t  said:  ^'Congress  did  not  use 
terms  of  permission  to  the  States  to  act,  but  simply 
removed  an  impediment  to  the  enforcement  of  the 
State  laws  in  respect  to  imported  packages  in  their 
original  condition,  created  by  the  absence  of  a  spe- 
cific utterance  on  its  part.  It  imparted  no  power  to 
the  State  not  then  possessed,  but  allowed  imported 
property  to  fall  at  once  upon  arrival  within  the  local 
jurisdiction." 

*'A11  State  statutes  discriminating  in  any  way 
against  citizens  of  other  States,  or  the  productions 
of  other  States,  have  invariably  been  held  unconsti- 


THE  EEQULATION  OF  COMMEECE  227 

tutional.  In  Welton  vs.  Missouri,^^  a  State  statute 
was  held  void  which  required  the  payment  of  a  li- 
cense tax  from  persons  selling,  by  going  from  place 
to  place  within  the  State  for  purpose,  goods  not  the 
growth  or  manufacture  of  the  State  and  did  not  re- 
quire such  a  license  tax  from  persons  so  selling  goods 
which  were  the  growth  or  manufacture  of  the  State. 
On  the  other  hand,  in  Howe  Machine  Company  vs. 
Gage,^^  a  State  statute  which  imposed  a  like  tax, 
without  discriminating  as  to  the  place  of  growth  or 
produce  of  material  or  manufacture,  was  adjudged 
to  be  constitutional  and  valid  as  applied  to  machines 
made  in  and  brought  from  another  State. 

The  law  of  Kentucky  (Act  of  March  2,  1860) 
required  from  the  agent  of  every  express  company 
not  incorporated  by  the  laws  of  Kentucky  a  license 
from  the  auditor  of  public  accounts  before  he  could 
carry  on  business  for  said  company  in  the  State. 
This  was  held  unconstitutional  in  Crutcher  vs.  Ken- 
tucky,^^  so  far  as  it  applied  to  interstate  commerce. 

In  Robbins  vs.  Shelby  County  Taxing  District,''' 
a  State  law  requiring  the  payment  of  a  license  tax 
by  drummers  and  persons  not  having  a  regularly 
licensed  house  of  business  within  the  taxing  district, 
offering  for  sale  or  selling  any  goods  by  sample,  was 
decided  to  be  unconstitutional  as  applied  to  persons 
offering  to  sell  goods  on  behalf  of  merchants  residing 
in  other  States,  because,  as  the  majority  of  the  court 
held,  its  effect  was  'to  tax  sale  of  such  goods,  or  to* 

"91  U.  8.,  275. 
"  100  U.  S.,  676. 
"  141  U.  S.,  47. 
-  120  U.  S.,  480. 


238  COMMEECIAL  LAW 

offer  to  sell  them,  before  they  are  brought  into  the 
State.'  " 

But  in  Delanater  vs.  South  Dakota,^**  a  law  of 
South  Dakota  imposing  an  annual  license  tax  on 
traveling  salesmen  selling  or  offering  for  sale  or  so- 
liciting orders  for  intoxicating  liquors  in  quantities 
of  less  than  five  gallons  was  held  constitutional. 

An  important  constitutional  question  at  the  pres- 
ent day  is  the  question  of  the  rights  of  a  corporation, 
established  by  one  of  the  States  of  the  Union,  in  an- 
other State.  It  may  be  said  in  general  on  this  point 
that  a  corporation  is  not  a  citizen  of  the  State  which 
creates  it  under  the  clause  of  the  fourth  article 
providing  that : 

^*The  citizens  of  each  State  shall  be  entitled  to 
all  privileges  and  immunities  of  citizens  in  the  sev- 
eral States.'* 

A  foreign  corporation  doing  business  in  a  State, 
however,  is  protected  under  the  provisions  of  the 
fourteenth  amendment,  that  no  State  shall  "deny  to 
any  person  within  its  jurisdiction  the  equal  protec- 
tion of  the  laws." 

A  State  may  thus  prohibit  corporations  from  do- 
ing business  within  its  limits,  or  it  may  admit  them 
under  such  conditions  as  it  may  deem  proper;  it 
cannot  admit  them,  however,  and  then  discriminate 
against  them.  In  a  recent  case^^  it  was  held  by  the 
United  States  Circuit  Court  for  the  Eastern  District 
of  Arkansas  that : 

*^ While  a  State  which  has  admitted  a  foreign  cor- 
poration to  the  right  to  do  business  therein  has 

» 205  V.  B.,  93. 

«  Chicago,  R.  I.  &  P.  Hy  Co.  vs.  Lndwig,  1j6  Fed.  Rep.,  152. 


THE  REGULATION  OF  COMMERCE  229 

power  to  withdi'aw  such  permission  at  pleasure,  the 
exercise  of  such  power  is  subject  to  the  limitation 
that  where  the  corporation  has  been  granted  a  fran- 
chise in  the  nature  of  a  contract  it  is  protected 
from  impairment  by  the  contract  clause  of  the 
constitution/* 

Many  cases  have  recently  come  before  the  Fed- 
eral Courts  involving  the  construction  of  that  series 
of  acts  which  began  with  the  Interstate  Commerce 
Act  of  1887. 

Section  136.    Crandall  vs.  Nevada. 

In  each  of  the  cases  mentioned  in  the  last  section 
which  held  a  State  statute  to  be  unconstitutional, 
such  decision  was  based  upon  the  violation  by  the 
statute  of  some  particular  clause  of  the  Constitu- 
tion. There  remains  to  be  considered  an  important 
and  far-reaching  case  where  the  unconstitutionality 
of  a  law  was  placed  upon  the  broader  grounds  of  op- 
position to  the  general  spirit  and  meaning  of  the 
Constitution  as  a  whole. 

llie  principle  that  a  statute,  either  National  or 
State,  might  be  unconstitutional,  even  although  it 
was  impossible  to  poiut  out  the  particular  clause  or 
line  of  the  Constitution  violated  was  recognized  as 
early  as  the  famous  decision  in  McCulloch  vs.  Mary- 
land. This  doctrine  was  more  particularly  applied 
to  commercial  regulations  in  the  case  of  Crandall  vs. 
Nevada.^^ 

The  State  of  Nevada  enacted  a  law  providing  that 
a  capital  tax  of  one  dollar  should  be  levied  upon 
every  person  leaving  the  State  by  any  raili'oad  or 

"  6  Wallace,  35. 


230  COMMERCIAL  LAW 

stage  coach,  such  tax  to  be  paid  by  the  officers  and 
agent  of  the  raUroad  companies  and  the  proprietor! 
of  the  stage  coaches.  For  a  violation  of  this  statute 
Wm.  H.  Crandall  was  arrested  and  imprisoned.  As 
a  defense  Crandall  pleaded  the  unconstitutionality- 
of  the  law,  and  the  Supreme  Court  of  Nevada,  up- 
holding the  statute,  he  carried  the  case  to  the  Su- 
preme Court  of  the  United  States  by  a  writ  of  error. 
The  principle  emmciated  in  this  case  can  be  seen  best 
by  the  following  extracts  from  the  decision: 

In  the  argument  of  the  counsel  for  the  defend- 
ant in  error,  and  in  the  opinion  of  the  Supreme  Court 
of  Nevada,  which  is  found  in  the  record,  it  is  assumed 
that  this  question  must  be  decided  by  an  exclusive 
reference  to  two  provisions  of  the  Constitution, 
namely:  that  which  forbids  any  State,  without  the 
consent  of  Congress,  to  lay  any  imposts  or  duties  on 
imports  or  exports,  and  that  which  confers  on  Con- 
gress the  power  to  regulate  commerce  with  foreign 
nations  and  among  the  several  States. 

The  question  as  thus  narrowed  down  is  not  free 
from  difficulties.    .    .    . 

But  we  do  not  concede  that  the  question  before 
us  is  to  be  determined  by  the  two  clauses  of  the  Con- 
stitution which  we  have  examined. 

The  people  of  these  United  States  constitute 
t)ur  nation.  They  have  a  government  in  which  all 
of  them  are  deeply  interested.  This  government 
has  necessarily  a  capitol  constructed  by  law,  where 
its  principal  operations  are  conducted.  Here  sits  its 
legislature,  composed  of  senators  and  representatives 
from  the  States  and  from  the  people  of  the  State. 
Here  resides  the  president,  directing  through  thou- 


THE  REGULATION  OF  COMMERCE  231 

sands  of  agents  the  execution  of  the  laws  all  over 
this  vast  country.  Here  is  the  seat  of  the  supreme 
judicial  power  of  the  nation,  to  which  all  its  citizens 
have  a  right  to  resort  to  claim  justice  at  its  hands. 
Here  are  the  great  executive  departments  adminis- 
tering the  offices  of  the  mails,  of  the  public  lands,  of 
the  collection  and  distribution  of  the  public  revenues, 
and  of  our  foreign  relations.  These  are  established 
and  conducted  under  the  admitted  powers  of  the 
Federal  Government.  That  government  has  a  right 
to  call  to  this  point  any  or  all  of  its  citizens  to  aid  in 
its  service,  as  members  of  the  Congress,  of  the  coiu-ts, 
of  the  executive  departments,  and  to  fill  all  its  other 
offices;  and  this  right  cannot  be  made  to  depend 
upon  the  pleasure  of  a  State  over  whose  territory 
they  must  pass  to  reach  the  point  where  these  serv- 
ices must  be  rendered.  The  government  also  has 
its  offices  of  secondary  importance  in  all  other  parts 
of  the  country.  On  the  sea  coasts,  and  on  the  rivers 
it  has  its  ports  of  entry.  In  the  interior  it  has  its 
land  offices,  its  revenue  offices  and  its  sub-treasuries. 
In  all  these  it  demands  the  services  of  its  citizens, 
and  is  entitled  to  bring  them  to  these  points  from  all 
quarters  of  the  nation,  and  no  power  can  exist  in  a 
State  to  obstruct  this  right  that  would  not  enable  it 
to  defeat  the  purpose  for  which  the  government  was 
established. 

The  Federal  power  has  a  right  to  declare  and 
prosecute  wars  and,  as  a  necessary  incident,  to  raise 
and  transport  troops  through  and  over  the  territory 
of  any  State  of  the  Union. 

If  this  right  is  dependent  in  any  sense,  however 
limited,  upon  the  pleasure  of  a  State,  the  govern- 


232  COMMEECIAL  LAW 

ment  itself  may  be  overthrown  by  an  obstruction  of 
its  exercise.     *     *     * 

But  if  the  government  has  these  rights  on  her 
account,  the  citizen  also  has  correlative  rights.  He 
has  the  right  to  come  to  the  seat  of  government  or 
to  any  business  he  may  have  with  it.  To  seek  its 
protection,  to  share  its  offices,  to  engage  in  adminis- 
tering its  functions,  he  has  a  right  to  free  access  to 
its  seaports,  through  which  all  the  operations  of  for- 
eign trade  and  commerce  are  conducted,  to  the  sub- 
treasuries,  the  land  offices,  the  revenue  offices,  and 
the  courts  of  justice  in  the  several  States,  and  this 
right  is  in  its  nature  independent  of  the  will  of  any 
State  over  whose  soil  he  must  pass  in  the  exercise 
of  it. 

The  views  here  advanced  are  neither  novel  nor 
unsupported  by  authority.  The  question  of  the  tax- 
ing power  of  the  States,  as  its  exercise  has  affected 
the  functions  of  the  Federal  government,  has  been 
repeatedly  considered  by  this  court,  and  the  right 
of  the  States  in  this  mode  to  impede  or  embarrass 
the  constitutional  operations  of  that  government,  or 
the  rights  which  its  citizens  hold  under  it,  has  been 
uniformly  denied." 

Crandall  vs.  Nevada  emphasizes  both  the  general 
supremacy  of  the  Federal  government  and  the  wide 
extent  of  its  power  of  regulation  over  commerce. 
Although  the  case,  directly,  merely  denies  a  certain 
power  to  the  States,  it  also,  by  the  strongest  infer- 
ence, confers  additional  powers  upon  the  central 
government.  The  control  of  the  United  States  gov- 
ernment as  asserted  in  this  case  is  a  far  stronger 
one  than  that  proclaimed  in  Gibbons  vs.  Ogden,  or 


THE  EEGULATION  OF  COMMEECE  233 

Cooley  vs.  Warden*  of  the  Port.  Any  power  which 
rests  entirely  upon  a  particular  clause  must  of  neces- 
sity fall  short,  in  the  extent  of  its  application,  of  a 
power  resting  upon  the  spirit  and  intention  of  the 
whole  Constitution,  Such  a  power  as  the  latter  can 
be  expanded  to  keep  pace  with  the  expansion  of  the 
nation,  and  can  always  give  authority  for  whatever 
decrees  of  Federal  regulation  of  conunerce  the  public 
welfare  may  seem  to  demand. 

Section  137.    The  Interstate  Commerce  Commission. 

Although  Congress  had  passed  an  act  for  the 
regulation  of  railroads  as  early  as  1866,  it  was  not 
until  the  passage  of  the  Interstate  Commerce  Act  in 
1887  that  any  real  effort  was  made  for  an  effective 
regulation  of  the  business  of  common  carriers  w^ho 
were  engaged  in  interstate  conmaerce.  The  imme- 
diate cause  of  the  passage  of  this  act  was  the  de- 
cision in  1886  of  the  Supreme  Court  of  the  United 
States  in  Wabash,  St.  Louis  and  Pacific  Railroad  Co. 
vs.  Illinois,®'  holding  that  the  States  had  not  power 
to  regulate  rates  within  their  borders  charged  by 
railroads  on  interstate  shipments.  This  decision  not 
only  reversed  the  decision  rendered  in  the  case  of  the 
Supreme  Court  of  Illinois,  but  was  also  contraiy  to 
the  early  decision  of  the  Supreme  Court  of  the 
United  States  in  the  so-called  Granger  cases®^  and 
clearly  showed  the  necessity  of  Federal  legislation 
on  the  subject. 

The  result  was  the  passage  of  the  Interstate  Com- 
merce Act,  which  became  a  law  on  February  4,  1887. 

"  118  TJ.  S.,  557;  104  UL,  476. 
"D*  U.  8.,  113. 


234  COMMERCIAL  LAW 

The  bill  provided  for  the  appointment  of  a  commis- 
sion with  a  general  control  over  the  business  of  all 
common  carriers  engaged  in  intei*state  commerce, 
which  transport  goods  either  entirely  or  partially  by 
railroads.  Coromon  carriers  engaged  in  interstate 
commerce  who  transport  goods  entirely  by  water, 
and  independent  of  express  companies,  do  not  come 
within  the  provisions  of  the  act. 

The  commission  has  the  power  to  declare  the 
rates  charged  by  railroads  unreasonable,  and  at  first 
they  undertook  to  prescribe  rates  for  the  future. 
This  right,  however,  was  soon  denied  to  them  by  the 
Supreme  Court,®^  with  a  consequent  very  great 
diminution  of  the  efficiency  of  the  commission.  The 
commission  for  a  number  of  years  could  not  even 
prescribe  a  maximum  and  minimum  rate.  The  most 
effective  provisions  of  the  "Interstate  Commerce 
Act''  have  been  those  against  discrimination  and 
against  pooling  by  the  railroads,  but  even  these  have 
been  avoided  and  only  partially  enforced,  and  the 
success  of  the  act  to  date  has  not  been  very  marked. 
The  responsibility  for  the  failure  falls  about  equally 
on  each  of  the  three  departments  of  the  government. 

Amendatory  acts  were  passed  by  the  Congress 
in  1889,  1893,*1903  and  1906.  "The  first  of  these 
was  that  of  1889  and  gave  a  shipper  an  additional 
summary  and  effective  remedy  by  writ  of  mandamus 
to  compel  the  carrier  to  furnish  equal  facilities. 
That  of  1893  remedied  the  difficulty  growing  out  of 
the  inability  to  enforce  self -incriminating  testimony. 
In  1903  was  enacted  the  so-called  Expedition  Act, 

••The  Social  Dircile  Case,  162  T7.  S.,  184,  184;  Cincinnati  Freight 
Bureau  Case,  176  U.  S.,  479. 


THE  REGULATI0T7  OF  COMMEECE  235 

which  materially  expedited  the  procedure  in  suits 
brought  by  the  United  States,  or  suits  prosecuted  by 
direction  of  the  attorney  general  in  the  name  of  the 
Interstate  Commerce  Commission.  The  Amendatory 
Act  of  February  9,  1903,  known  as  the  Elkins  Law, 
made  very  important  changes,  and  materially  en- 
forced the  provisions  against  discriminations,  in  that 
it  made  the  published  rates  conclusive  against  the 
carrier,  every  deviation  therefrom  being  punishable. 
The  scope  of  the  act  was  also  materially  extended 
as  to  the  parties  subject  to  its  provisions.  Fine  was 
substituted  for  imprisonment  in  the  penal  provisions 
of  the  act.  None  of  these  amendments  have  affected 
the  rate-making  power  of  the  Commission."^® 

There  is  no  definite  standard  of  reasonableness  in 
railroad  rates.  "The  subject  of  the  reasonableness 
of  raikoad  rates  and  the  factors  to  be  considered  in 
the  determination  of  such  reasonableness  have  thus 
been  considered  by  the  Federal  courts  in  two  classes 
of  cases.  That  is,  in  cases  arising  under  the  Inter- 
state Commerce  Act,  where  the  shipper  complains 
that  he  is  charged  by  the  carrier  more  than  a  reason- 
able rate,  and  in  cases  arising  under  State  laws, 
where  the  carrier  complains  that  he  is  prohibited  by 
the  State  law  or  order  of  State  Commission  having 
the  force  of  law  from  charging  a  reasonable  rate. 

"While  the  Interstate  Commerce  Act  reaffirms 
the  common  law  in  the  requirement  of  reasonable- 
ness, neither  the  statute  nor  the  common  law  fur- 
nishes any  definite  standard  for  the  determination 
of  what  is  reasonable.  In  ordinary  business  trans- 
actions a  reasonable  charge  for  a  personal  service  is 

••  Judson  on  Interetate  Commerce,  p.  62. 


236  COMMEECIAL  LAW 

the  resultant  of  the  free  economic  forces  of  supply 
and  demand.  It  is  obvious  that  under  the  compli- 
cated conditions  of  railway  transportation  this  free 
play  of  the  economic  forces  of  supply  and  demand 
does  not  ordinai*ily  exist.  When  competition  does 
act  in  determining  railway  rates,  it  is  only  at  certain 
points,  as  teiminal  centers,  where  the  rate  may  be 
made  unreasonable  from  the  carrier's  point  of  view, 
while  at  local  points  on  the  same  line  it  may  not  exist 
at  all.  The  standard  of  reasonableness,  therefore,  is 
one  thing  for  the  railroad  manager  who  wishes  to 
seciu-e  at  all  times  a  reasonable  profit  upon  the  cost 
of  service,  and  a  very  different  thing  for  the  shipper 
who  wishes  to  secure  at  all  times  a  reasonable  profit 
for  his  own  business  as  against  his  competitors  in 
other  communities."®^ 

In  the  case  of  United  States  vs.  Trans-Missouri 
Fi-eight  Association,®*  the  Supreme  Court  of  the 
United  States  said  on  this  point: 

*^  There  is  another  side  to  this  question,  however, 
and  it  may  not  be  amiss  to  refer  to  one  or  two  facts 
which  tend  to  somewhat  modify  the  light  in  which 
the  subject  could  be  regarded.  If  only  that  kind  of 
contract  which  is  in  unreasonable  restraint  of  trade 
be  within  the  meaning  of  the  statute,  and  declared 
therein  to  be  illegal,  it  is  at  once  apparent  that  the 
subject  of  what  is  a  reasonable  rate  is  attended  with 
great  uncertainty.  What  is  a  proper  standard  by 
which  to  judge  the  fact  of  reasonable  rates?  Must 
the  rate  be  so  high  as  to  enable  the  return  for  tHe 
whole  business  done  to  amount  to  sum  sufficient  to 

"  Id.  p.  137. 

« 166  U.  S.,  290. 


THE  EEGULATION  OF  COMMERCE  237 

afford  the  shareholder  a  fair  and  reasonable  profit 
upon  his  investment?  If  so,  what  is  a  fair  and  rea- 
sonable profit?  That  depends  sometimes  upon  the 
risk  incurred,  and  the  rate  in  itself  differs  in  differ- 
ent localities.  Which  is  the  one  to  which  reference 
is  to  be  made  as  the  standard?  Or  is  the  reasonable- 
ness of  the  profit  to  be  limited  to  a  fair  return  upon 
the  capital  that  would  have  been  sufficient  to  build 
and  equip  the  road,  if  honestly  expended?  Or  is  still 
another  standard  to  be  created,  and  the  reasonable- 
ness of  the  charges  tried  by  the  cost  of  the  carriage 
of  the  article  and  reasonable  profit  allowed  on  that? 
And  in  such  case  would  contribution  to  a  sinking 
fund  to  make  repairs  upon  the  roadbed  and  renewal 
of  cars,  etc.,  be  assumed  as  a  proper  item?  Or  is  the 
reasonableness  of  the  charge  to  be  tested  by  refer- 
ence to  the  charges  for  the  transportation  of  the  same 
kind  of  property  made  by  other  roads  similarly  sit- 
uated? If  the  latter,  a  combination  among  such 
roads  as  to  rates  would,  of  course,  furnish  no  means 
of  answering  the  question.  It  is  quite  apparent, 
therefore,  that  it  is  exceedingly  difficult  to  formulate 
even  the  terms  of  the  rule  itself  which  should  gov- 
ern in  the  matter  of  detennining  what  would  be  rea- 
sonable rates  for  transportation.  AMiile  even  after 
the  standard  should  be  determined  there  is  such  an 
infinite  variety  of  facts  entering  into  the  question 
or  what  is  a  reasonable  rate,  no  matter  what  stand- 
ard is  adopted,  that  any  individual  shipper  would  in 
most  cases  be  apt  to  abandon  the  effort  to  show  the 
unreasonable  character  of  a  charge  sooner  than 
hazard  the  great  expense  in  time  and  money  neces- 
sary to  prove  the  fact,  and  at  the  same  time  incur 


238  COMMERCIAL  LAW 

the  ill  will  of  the  road  itself  in  all  his  future  dealings 
with  it.  To  say,  therefore,  that  the  act  excludes 
agreements  which  are  not  in  unreasonable  restraint 
of  trade,  and  which  tend  simply  to  keep  up  reason- 
able rates  for  transportation,  is  substantially  to  leave 
the  question  of  reasonableness  to  the  companies 
themselves." 

Section  138.    The  Anti- Trust  Act. 

The  Sherman  Act  of  1890,  entitled  "An  Act  to 
protect  trade  and  commerce  agamst  unlawful  re- 
straints and  monopolies,"  declared  illegal  and  crimi- 
nal every  contract  or  combination,  in  the  form  of 
trust  or  otherwise,  or  conspiracy  in  restraint  of 
interstate  or  foreign  trade  or  commerce.  Violations 
of  this  act  were  at  first  punishable  by  either  fine  or 
imprisonment,  but  the  second  form  of  punishment 
has  been  abolished. 

A  narrow  interpretation  was  given  to  this  act 
by  the  Sui^reme  Court  of  the  United  States  in  the 
Sugar  Trust  case,^^  where  it  was  held  that  the  stat- 
ute could  not  be  held  to  apply  to  the  case  of  a  State 
manufacturing  company  which  was  acquiring  by 
purchase  of  the  stock  of  other  refining  companies 
through  shares  of  its  own  stock  nearly  complete  con- 
trol of  the  manufacture  of  refined  sugar  in  the 
United  States. 

The  most  important  decision  arising  under  the 
Anti-Trust  Law  has  been  that  of  the  Northern 
Securities  case.'® 

The  following  synopsis   of  this  case  is  taken 

"United  States  vs.  Knight  Compiny,  156  U.  S.,  1. 

'*  United  States  vs.  Northern  Securitiea  Company,  193  U.  S.,  197. 


THE  EEGULATION  OF  COMMEKCE  239 

from  the  latest  work  on  the  subject  of  interstate 
commerce : 

''The  Northern  Securities  case  was  novel  in  that 
it  decided  that  the  corporation  organized  under  the 
laws  of  a  State  and  impowered  under  its  charter  to 
hold  the  stock  of  other  corporations  was  prohibited 
by  this  act  from  holding  the  stock  of  competing  in- 
terstate railroad  corporations.  The  illegal  combina- 
tion was  founded  upon  the  fact  of  control  of  com- 
peting railroads  in  a  single  authority  and  the  result- 
ing power  of  direct  suppression  of  competition 
through  such  control.  Thayer,  J.,  in  the  circuit 
com-t,  said  that  a  State  could  not  invest  a  corpora- 
tion organized  under  its  laws  to  do  acts  in  its  name 
which  operate  in  restraint  of  trade  and  commerce, 
and  that  the  court  would  not  consider  whether  a 
combination  would  be  of  benefit  to  the  public;  but 
that  a  holding  corporation  organized  under  the  laws 
of  the  State  was  in  violation  of  the  Anti-Trust  Act, 
since  it  destroyed  any  active  form  of  competition 
between  the  two  roads,  and  it  was  immaterial  that 
each  company  had  its  own  board  of  directors." 

The  holding  corporation  was  condemned  in  this 
case,  not  because  it  was  a  "holding  corporation," 
merely,  but  because  it  held  the  stock  of  subsidiary 
corporations  directly  engaged  in  interstate  com- 
merce, and  thus  controlled  competition  as  between 
those  companies.  The  act,  as  such,  had  nothing  to 
do  with  holding  corporations  where  the  subsidiary 
corporations  are  not  engaged  as  competitors  directly 
employed  as  public  carriers  in  interstate  commerce. 
The  right  of  the  holding  corporation  in  other  cases 
depends  upon  the  auhorization  of  its  own  charter 


240  COMMERCIAL  LAW 

and  the  laws  of  the  State  whereunder  the  subsidiary 
companies  are  organized  and  do  business. 

In  the  Trans-Missouri  Freight  Association  case^^ 
the  question  was  directly  raised  whether  the  pro- 
hibitory provisions  of  the  act  of  1890  applied  to  all 
contracts  relative  to  interstate  or  foreign  trade  or 
commerce,  or  only  to  such  contracts  as  provided  for 
unreasonable  restraints.  The  Supreme  Court  by  a 
vote  of  five  to  four  held  that  the  act  covered  all 
restraints. 

In  the  case  of  Addyston  Pipe  and  Steel  Co.  vs. 
United  States,'^  the  contract  in  question  was  held  to 
be  violation  of  the  law,  and  the  rule  was  laid  down 
that  no  contractual  restraint  of  trade  was  enforcible 
at  common  law  unless  it  w^as  merely  ancillary  to 
some  lawful  contract  involving  some  such  relations 
as  vendor  and  vendee,  partnership,  employer,  and 
employee,  and  necessary  to  protect  the  covenantee  in 
the  enjoyment  of  the  legitimate  fruits  of  the  con- 
tract, or  to  protect  him  from  the  dangers  of  those 
unjust  acts  by  the  other  parties.  The  main  purpose 
of  the  contract  suggests  the  measure  of  protection 
needed,  and  furnishes  a  sufficiently  uniform  standard 
for  determining  the  reasonableness  and  validity  of 
the  restraints;  but  where  the  sole  object  of  both  par- 
ties in  making  the  contract  is  merely  to  restrain  com- 
petition and  enhance  and  maintain  prices,  the  con- 
tract is  void  and  not  enforcible  at  common  law,  and 
where  made  in  interstate  oommerc*  is  violative  of  the 
act  of  1890. 

"  166  u.  s.,  aso. 

"175  U.  S.,  211;  85  Fed.  E«p.,  -371. 


THE  EEGULATION  OF  COMMERCE  241 

Section  139.    Recent  Statutes  and  Decisions. 

One  of  the  acts  that  amended  the  Interstate 
Commerce  Act  was  that  of  June  29,  1906.  The 
most  important  provision  of  this  act  is  the  one  giving 
to  the  commission  the  power  to  fix  maximmn  rates. 
Most  of  the  other  effective  provisions  contained  in 
the  original  draft  of  the  bill  were  stricken  out  before 
its  final  passage. 

A  recent  important  decision  as  to  the  powers  of 
the  State  over  carriers  is  that  in  Atlantic  Coast  Line 
vs.  N.  C.  Ry.  Commission/^  in  which  the  power  of 
the  commission  to  require  a  carrier  to  put  in  an  addi- 
tional train  to  be  run  at  even  a  pecuniary  loss  (of 
course,  however,  not  causing  the  company  to  run  its 
entire  business  at  a  loss)  but  necessary  to  meet  the 
convenience  of  the  traveling  public  on  connecting 
with  another  train,  was  sustained. 

Two  other  extremely  important  recent  decisions 
are  Miss.  Ry.  Comm.  vs.  111.  Cent.  Ry.  Co."^^  and  At- 
lantic Coast  Line  Ry.  CI.  vs.  Wharton,  in  which  it  is 
held  that  the  State,  acting  through  its  administrative 
agent,  a  railway  commission,  may,  in  the  absence  of 
congressional  legislation,  require  an  interstate  train 
to  stop  at  stations  within  the  State  when  it  is  neces- 
sary to  do  so  to  furnish  the  citizens  proper  facilities; 
yet  when  the  public  service  is  reasonably  fulfilled, 
State  cannot  compel  interstate  trains  to  stop. 

These  three  cases,  taken  together,  give  the  State 
full  power  to  compel  adequate  service  to  the  public. 

A  number  of  important  cases  involving  interstate 

"206  U.  S.,  1. 
«203  U.  S.,  35. 
16 


242-  COMMERCIAL  LAW 

commerce  in  some  form  or  other  have  recently  come 
before  the  Federal  courts.  The  prosecution  of  the 
Standard  Oil  Company  in  1907  attracted  great  at- 
tention, but  the  decision  decided  no  important  legal 
question. 

Two  important  decisions  have  also  been  handed 
down  by  the  Supreme  Court,  the  cases  being  those  of 
In  the  Matter  of  Edward  T.  Young,  Petitioner,  and 
Thomas  F.  Hunter,  Sheriff  of  Buncombe  County, 
State  of  North  Dakota,  vs.  James  H.  Wood.  The 
legislatures  of  both  Minnesota  and  North  Carolina 
had  passed  acts  regulating  the  rates  to  be  charged 
by  railroads  in  the  States,  and  inflict  heavy  penalties 
for  the  violation  of  such  rates.  Injunctions  were  is- 
sued by  the  circuit  courts  of  the  United  States 
against  the  enforcement  of  the  statutes  by  the  States. 
The  decision  in  each  case  was  against  the  constitu- 
tionality of  the  State  acts. 

The  latest  amendments  to  the  Interstate  Com- 
merce Act  to  date  were  those  made  by  the  Trans- 
portation Act,  1920,  which  provided  for  the  return 
of  the  railroads  to  their  owners  after  the  period  of 
Federal  control  during  the  great  war,  and  largely 
extended  the  powers  of  the  Commerce  Commission. 
A  summary  of  Federal  legislation  affecting  inter- 
state commerce,  up  to  1921,  will  be  found  in  Part  IV 
of  the  volume  entited  "Railway  Transportation — 
History,  Operation  and  Regulation." 


APPENDIX  A. 
CONTRACTS— SELECTED  FORMS. 

Eight-of-Way  Contract. 

Whereas,  The  construction  of  a  Railway  is  con- 
templated on  a  line  which,  as  now  located,  crosses  the 
land  hereinafter  described, 

Now,  Therefore,  To  aid  in  securing  the  location 
and  construction  thereof,  and  in  consideration  there- 
of, and  of  One  Dollar  to  me  in  hand  paid,  the  receipt 
of  which  is  hereby  acknowledged,  I  Do  Hereby  Cove- 
nant and  Agree,  for  myself,  my  heirs,  executors,  ad- 
ministrators and  assigns,  to  sell  to  the  Western  Rail- 
way Co.,  a  corporation,  etc.,  and  assigns  a  strip  of 
land  two  himdred  feet  in  width,  being  one  himdred 
feet  in  width  on  each  side  of  the  center  line  of  said 
Railway,  as  located  across  my  land  in  Section  18 
of  Township  12,  North  Range  10  West,  in  Washing- 
ton County,  State  of  Illinois,  hereby  g'*ving  full 
power  to  the  Western  Railway  Co.,  or  assigns,  on 
the  definite  location  of  said  Railway,  to  enter  upon 
the  land  and  premises  of  the  width  aforesaid,  and 
occupy,  use  and  control  the  same  land  and  construct 
said  Railroad  thereon. 

And  I  Further  Covenant  and  agree,  for  myself, 
my  heirs,  executors,  administrators  and  assigns,  that 
upon  the  demand  of  said  Western  Railway  Co.,  or 
assigns,  at  any  time  within  six  months  after  the 

243 


244  COMMEECIAL  LAW 

line  of  said  Railway  has  been  definitely  located 
across  said  land,  I  will  convey  to  the  said  Western 
Railway  Co.,  or  assigns,  by  Warranty  Deed,  free  and 
clear  of  all  incumbrances  and  liens,  the  said  strip 
of  land;  and  will  in  and  by  said  Deed  or  by  some 
other  good  and  sufficient  instrument,  release  and 
discharge  said  Western  Railway  Co.,  or  assigns,  from 
all  claims  for  damages  to  my  land  by  reason  of  the 
construction,  operation  and  maintenance  of  said  Rail- 
way, all  for  the  sum  of  four  hundred  dollars  to  be 
paid  to  me  upon  delivery  of  said  Deed. 

And  any  land  alongside  of  and  adjoining  said 
strip,  which  shall  (at  the  option  of  said  Western 
Railway  Co.)  be  taken,  used  and  appropriated  in  the 
construction,  operation  or  repair  of  said  Railway, 
shall  be  conveyed  upon  demand,  and  paid  for  in  like 
manner,  at  the  rate  of  one  hundred  dollars  per  acre, 
for  the  quantity  so  taken,  used  and  appropriated 
outside  of  the  strip  aforesaid  within  four  months 
after  the  same  shall  be  taken,  used  and  appropriated 
as  aforesaid. 

Provided,  That  this  agreement  is  upon  the  ex- 
press condition  that  the  said  Railway  shall  be  built 
across  my  said  land. 

Should  said  Railway  not  be  constructed  across 
my  said  land,  then  this  agreement  shall  be  null  and 
void. 

Witness  my  hand  and  seal  this  10th  day  of  June, 
A.  D.  19    . 

Horace  K.  Devons.        [Seal.] 


APPENDIX  A  245 

County  of  Washington.  | 

State  of  Illinois,       j 

I,  Norman  Clark,  a  Notary  Public,  in  and  for 
said  County  in  the  State  aforesaid,  Do  Hereby  Cer- 
tify, that  Horace  K.  Devons,  personally  known  to  me 

to  be  the  identical  person named  and  described 

in,  and  whose  name  is  subscribed  to  the  foregoing 

instrument  as  grantor ,  and  who  executed  the 

same,  appeared  before  me  this  day  in  person  and 
acknowledged  to  me  that  he  signed,  sealed  and  de- 
livered said  instrument,  as,  and  that  the  same  is 
his  free  and  voluntary  act  and  deed  for  the  uses  and 
purposes  therein  set  forth,  including  the  release  and 
waiver  of  the  right  of  homestead. 

Given  under  my  hand  and  seal,  this  10th  day  of 
June,  A.  D.  19    . 

[Seal.]  Norman  Clark, 

Notarv  Public. 


246  COMMERCIAL  LAW 

Agreement  and  Power  of  Attorney  To  Prosecute 

Suit  for  Proportion  of  Amount  To  Be 

Recovered. 

Whereas,  the  undersigned,  Chester  Chase,  of 
Chicago,  County  of  Cook,  and  State  of  Illinois,  is 
about  to  bring  a  certain  action  at  law  against  Ernest 
Martin,  in  the  County  of  Cook  and  State  of  Illinois, 
to  recover  the  sum  of  one  thousand  dollars,  in  an 
action  arising  out  of  a  breach  of  a  contract  for  the 
employment  of  the  said  Chester  Chase  by  the  said 
Ernest  Martin,  said  contract  bearing  date  of  Decem- 
ber 1,  1^    . 

And  Whereas,  The  said  Chester  Chase  has  this 
day  appointed  Clarke  Benedict  as  his  attorney,  for 
the  purpose  of  pleading  and  pursuing  said  action  to 
a  compromise  or  to  final  judgment,  execution  and 
collection  thereof,  according  to  the  terms  and  pro- 
visions of  a  certain  power  of  attorney  hereto  at- 
tached. 

Now,  Therefore,  It  is  agreed  by  and  between  the 
said  Chester  Chase  and  the  said  Clarke  Benedict,  as 
follows  to-wit: 

In  Consideration  of  the  services  already  rendered 
and  hereafter  to  be  rendered  by  said  Clarke  Benedict 
as  attorney  aforesaid  in  the  said  cause,  the  said  Ches- 
ter Chase  agrees  to  pay  to  said  Clarke  Benedict 
therefor  a  sum  of  money  equal  to  thirty  per  cent,  of 
the  gross  amount  recovered  from  the  defendant,  and 
^s  security  for  the  sum  of  money  to  be  paid,  the 
eaid  Chester  Chase  hereby  sells,  assigns,  transfers, 
and  sets  over  to  said  Clarke  Benedict  thirty  per  cent 


APPENDIX  A  247 

of  said  cause  of  action  and  thirty  per  cent  of  any 
sum  of  money  or  other  property  that  may  be  paid 
by  or  in  behalf  of  the  defendant  in  said  cause,  prior 
or  subsequent  to  any  verdict  or  judgment  thereon 
or  upon  any  compromise  thereof,  and  agrees  that 
said  power  of  attorney  shall  be  irrevocable. 

In  The  Event  that  nothing  is  collected  or  paid 
upon  said  cause  of  action,  the  said  Clarke  Benedict 
is  to  receive  nothing  for  his  services,  but  in  no  event 
is  he  to  be  liable  for  costs  of  any  kind,  and  Chester 
C^ase  is  to  furnish  the  e\idence  required. 

It  is  Further  Agreed  and  Understood  by  both 
parties  hereto  that  neither  party  shall  have  any 
power  or  authority  to  compromise  or  settle  said 
claim  or  suit  without  the  presence  of  or  consent  in 
writing  of  the  other  party  to  this  contract,  both  of 
whom  must  sign  in  discharge  of  settlement  of  said 
claim;  provided,  however,  that  said  attorney  may, 
in  the  ordinary  course  of  his  employment,  collect 
any  final  judgment  that  may  be  rendered  in  said 
cause  and  discharge  of  same  of  record  in  Court. 

It  Is  Further  Agreed,  That  by  virtue  of  and  in 
consideration  of  the  premises,  any  and  all  sums  of 
money  or  other  consideration  that  may  be  received 
by  either  party  to  this  contract  on  account  of  any 
settlement  or  compromise  of  said  cause  of  action  or 
of  any  judgment  or  verdict  hereafter  to  be  rendered 
therein  shall  be  held  by  such  party  receiving  the 
same,  as  the  agent  or  bailee  of  the  other  party  to 
this  contract,  and  such  agent  or  bailee  shall  be  sub- 
ject to  all  the  duties,  responsibilities,  and  liabilities 
attaching  to  such  relation,  until  each  party  hereto 
shall  have  received  his  just  share  of  said  money  or 


248  COMMEECIAL  LAW 

other  consideration  thus  paid  according  to  the  terms 
of  this  contract,  and  shall  have  duly  acknowledged 
the  same  in  writing  hereon. 

In  Witness  Whereof,  Both  parties  have  set  their 
hands  and  seals,  this  1st  day  of  June,  19    . 

Chester  Chase,        [Seal.] 

Garke  Benedict.     [Seal.] 

Know  All  Men  by  These  Presents,  That  Chester 
Chase  of  Chicago,  County  of  Cook,  and  State  of 
Illinois,  have  made,  constituted  and  appointed,  and 
by  these  presents  do  make,  constitute  and  irrevoc- 
ably appoint  Clarke  Benedict,  of  the  City  of  Chicago, 
County  of  Cook,  and  State  of  Illinois,  my  true  and 
lawful  attorney,  for  me  and  in  my  name,  place,  stead 
and  behalf,  to  institute  and  prosecute  in  such  Courts 
of  Law  and  Equity  as  he,  my  said  attorney,  may  be 
best  advised,  a  certain  action  which  I  am  about  to 
bring  against  Ernest  Martin  of  Chicago,  County  of 
Cook  and  State  of  Illinois. 

The  said  action  arises  out  of  the  breach  of  a  con- 
tract for  the  employment  of  the  said  Chester  Chase, 
by  the  said  Ernest  Martin,  said  contract  bearing 
date  of  December  1,  19^    . 

And  my  said  attorney  is  hereby  authorized  and 
directed  to  plead  and  pursue  said  cause  in  any  of 
said  Courts  to  a  compromise  or  to  final  judgment, 
execution  and  the  collection  thereof,  according  to  the 
conditions  and  provisions  of  a  certain  contract  be- 
tween myself  and  my  said  attorney,  executed  this 
day  and  hereunto  attached. 

And  I  hereby  give  and  grant  unto  him,  my  said 


APPENDIX  A  249 

attorney,  full  power  and  authority  to  do  and  perform 
each  and  every  act  and  thing  whatsoever  requisite 
and  necessary  to  be  done  in  and  about  the  premises 
as  fully  and  completely  and  to  all  intents  and  pur- 
poses as  I  might  or  could  do  if  personally  present 
at  the  doing  thereof,  with  fuU  power  of  substitution 
in  the  premises. 

And  I  Hereby  Ratify  and  confirm  all  that  my 
said  attorney  or  his  substitutes  shall  lawfully  do  or 
cause  to  be  done  by  virtue  hereof,  and  in  considera- 
tion of  the  agreement  with  said  Clarke  Benedict, 
hereto  attached,  this  power  of  attorney  is  made 
irrevocable. 

In  Testimony  Whereof,  I  have  hereunto  set  my 
hand  and  seal  this  1st  day  of  June,  19    . 

Signed,  Sealed  and  Delivered  in  Presence  of 

Raymond  Kinder, 
Frank  Spaulding 
Chester  Chase.        [Seal.] 


250  COMMERCIAL   LAW 

Farm  Contract. — Fanning  Upon  Shares. 

This  Agreement,  Made  this  20th  day  of  February, 
A.  D.  1908,  by  and  between  Arthur  L.  Mosely,  party 
of  the  first  part,  and  Edwin  Downs,  owner  of  the 
real  estate  hereinafter  described,  party  of  the  second 
part : 

Witnesseth,  That  said  party  of  the  first  part  here- 
by covenants  and  agrees  to  and  with  said  party  of 
the  second  part,  for  the  consideration  hereinafter 
named,  to  well  and  faithfully  till  and  farm  during 
the  term  of  this  contract,  being  March  1,  19  to 
March  1,  19  ,  in  a  good,  husbandman-like  manner, 
and  according  to  the  usual  course  of  husbandry  the 
following  described  premises  and  real  estate,  situ- 
ated in  the  County  of  Washington  and  State  of  Illi- 
nois, viz.,  northeast  quarter  of  section  20,  township 
20  north,  range  15,  east  of  the  third  principal 
meridian. 

And  Said  Party  of  the  First  Part  hereby  fm^ther 
covenants  and  agrees  to  sow  and  plant  the  said  land 
in  such  crops,  consistent  with  good  husbandry,  as 
said  party  of  the  second  part  shall  direct. 

Said  Party  of  the  First  Part  also  agrees  to  fur- 
nish, at  his  own  cost  and  expense,  all  proper  and  con- 
venient tools,  teams,  utensils,  farm  implements  and 
machinery  (except  as  hereinafter  otherwise  pro- 
vided) to  carry  on  and  cultivate  said  farm  during 
said  term,  and  to  furnish  and  provide  all  proper 
assistance  and  hire  help  in  and  about  the  cultivation 
and  management  of  said  farm,  and  to  farm  and  culti- 
vate the  said  lands  in  the  best  manner,  and  maintain 


APPENDIX  A  251 

and  keep  up  the  fences  so  as  to  protect  said  crop 
from  injury  and  waste,  and  to  watch,  care  for,  and 
protect  the  same,  and  protect  the  fruit  and  shade 
trees  thereon,  and  to  cut  no  trees,  and  to  commit 
no  waste  or  damage  on  said  real  estate,  and  to  suffer 
none  to  be  done,  and  to  crop  and  cultivate  said  lands, 
and  harvest,  thresh  and  secure  the  crops  grown 
thereon  in  farm-like  style  and  in  the  best  possible 
manner  during  said  term;  and  after  taking  off  the 
crops,  to  plow  immediately,  in  a  good  and  proper 
manner,  so  much  and  such  parts  of  said  farm  suitable 
for  a  succeeding  crop  as  shall  be  plowed  at  the  time 
said  party  of  the  first  part  takes  possession  thereof; 
and  to  keep  up  and  maintain  in  good  repair  all  struc- 
tures, stables,  cribs,  fences  and  improvements  on  said 
farm,  and  generally  do  and  perform  all  proper  and 
ordinary  w^ork,  labor,  care  and  skill  requisite,  usual 
or  necessary,  to  work  and  crop  said  premises  in  a 
proper  manner  and  style,  and  to  the  best  interests 
of  the  party  of  the  second  part;  and  further  agrees 
not  to  remove  any  straw  or  manure  from  said  farm, 
and  not  to  sell  or  remove,  or  suffer  to  be  sold  or 
removed  any  of  the  produce  of  said  farm  or  premises, 
of  any  kind,  character,  or  description,  until  the  divi- 
sion thereof,  without  the  written  consent  of  said 
party  of  the  second  part;  and  until  such  division,  the 
title  and  possession  of  all  hay,  grain,  crops  and  prod- 
uce, raised,  grown  or  produced  on  said  premises,  shall 
be  and  remain  in  said  party  of  the  second  part.  Upon 
the  termination  of  this  contract,  in  any  way,  said 
party  of  the  first  part  will  yield  up  said  premises  to 
said  party  of  the  second  part  or  his  order  in  good 
condition  and  repair. 


252  COMMERCIAL  LAW 

Said  Party  of  the  Fii'st  Part  Hereby  agrees  to 
pay  and  deliver  to  said  party  of  the  second  part  the 
1st  day  of  November,  19  ,  the  one-third  part  of  the 
crops  so  raised  on  said  lands,  or  eight  hundred  dol- 
lars for  the  use  of  the  above  described  land  for  the 
above  named  term. 

In  Consideration  of  the  faithful  and  diligent  per- 
formance of  the  foregoing  stipulations  by  said  party 
of  the  first  part,  said  party  of  the  second  part  agrees, 
upon  reasonable  request  thereafter  made,  to  give  and 
deliver  on  said  farm,  the  two-third  part  of  all  grains, 
vegetables  and  other  crops  so  raised  and  secured 
upon  said  fann  during  said  term,  for  the  sole  use 
and  benefit  of  said  party  of  the  first  part,  and  said 
party  of  the  first  part  agrees  to  deliver  at  the  home 
of  the  said  party  of  the  second  paii;  free  of  all  ex- 
pense to  said  party  of  the  second  part,  one-third  of 
said  crops;  and  said  party  of  the  first  part  further 
agrees  to  stack  on  said  premises,  free  from  all  charge 
to  said  party  of  the  second  part,  all  hay  cut  during 
said  term. 

This  Contract  is  made  with  the  imderstanding 
that  said  premises  are  at  all  times  subject  to  sale, 
and  in  case  of  sale  said  party  of  the  fii'st  part  shall 
re-deliver  possession  of  the  same  on  thirty  days' 
written  notice,  provided  he  shall  be  paid  for  any 
plowing  he  may  have  done  on  said  land  for  the  crop 
of  the  season  of  19  ,  and  not  seeded  at  time  of 
sale,  and  be  allowed  to  properly  cultivate,  harvest 
and  remove  any  crops  that  may  have  been  seeded 
before  the  time  of  sale,  provided  the  same  are  re- 
moved prior  to  November  15, 19    . 


APPENDIX  A  253 

In  Witness  Whereof,  said  parties  have  hereunto 
set  their  hands  and  seals  the  day  and  year  first  above 
written. 

Arthur  L.  Mosely.  [Seal.] 

Edwin  Downs.  [Seal.] 

Witnesses : 

Norman  Wood. 


2/54  COMMERCIAL  LAW 

Employee's  Contract. 

Agreement,  Made  between  Frank  Spaulding  and 
John  Barr. 

Witnesseth,  Frank  Spaulding  hires  and  employs 
the  said  John  Barr  in  his  business  in  his  store  on 
North  Clark  St.,  Chicago,  in  the  capacity  of  salesman, 
and  agrees  to  pay  him  during  the  time  that  he  shall 
remain  in  such  employment,  twenty  dollars  per  week, 
all  upon  the  terms  and  conditions  of  this  agreement. 

The  said  John  Barr  does  agree  to  and  with  the 
said  Frank  Spaulding,  that  he  will  devote  his  entire 
time,  skill,  labor,  and  attention  to  said  employment, 
during  the  time  for  which  he  may  be  so  employed, 
at  the  wages  aforesaid. 

It  is  expressly  provided  and  agreed  between  the 
parties  hereto,  that  said  Frank  Spaulding,  may,  at 
any  time,  terminate  said  employment,  at  his  election, 
upon  payment  to  him  of  what  may  be  coming  to  him 
at  the  rate  aforesaid,  on  the  evening  of  the  day  of 
his  actual  discharge. 

Of  the  cause  for  discharge,  said  Frank  Spaulding 
shall  be  the  sole  judge. 

Any  agreement  or  arrangement  by  which  the  said 
John  Barr  has  been  heretofore  employed  by  said 
Frank  Spaulding  is,  in  further  consideration  of  the 
premises,  canceled,  released  and  discharged  at  this 
date, — June  15, 19    . 

Frank  Spaulding,  [Seal.] 

John  Barr.  [Seal.] 


APPENDIX  A  265 


Coal  Contract. 


This  Article  of  Agreement,  made  the  1st  day  of 
July,  A.  D.  19  ,  between  Ritchie  Johnson,  of  the 
City  of  Chicago,  County  of  Cook,  and  State  of  Illinois, 
party  of  the  first  part,  and  John  D.  Hare  of  County 
of  Cook  and  State  of  Illinois,  of  the  second  part: 

Witnesseth,  That  the  parties  to  this  agreement, 
in  consideration  of  payments  to  be  made,  as  herein- 
after stated,  stipulate  and  agree  as  follows:  The 
said  party  of  the  first  part  agrees,  subject  to  the 
reservation  hereinafter  named,  to  sell  to  the  party 
of  the  second  part  one  thousand  tons  of  coal,  in  such 
quantities  as  the  said  party  of  the  second  part  may 
require  for  use,  at  his  factory  situated  in  Chicago, 
from  the  date  hereof  until  the  1st  day  of  July,  A.  D. 
19  ,  at  the  rate  of  two  doUars  and  seventy-five  cents 
($2.75)  per  ton,  said  coal  to  be  delivered  by  the  party 
of  the  first  part  at  the  said  factory  of  the  party  of 
the  second  part. 

The  said  party  of  the  second  part  agrees  to  buy 
of  the  party  of  the  first  part  all  the  coal  he  may 
need  for  use  in  said  factory  from  the  date  hereof 
until  the  first  day  of  July,  A.  D.  19  '  ,  and  to  pay  the 
said  party  of  the  first  part  the  rates  above  mentioned 
for  all  coal  delivered  during  the  next  preceding  calen- 
dar month.  It  is  further  mutually  agreed,  that  the 
said  party  of  the  first  part  shall  not  be  held  responsi- 
ble for  a  failure  to  deliver  coal  to  the  said  party  of 
the  second  part  during  unusual  delays  of  transporta- 
tion, resulting  from  strikes,  severe  storms,  or  other 
causes  beyond  the  control  of  the  party  of  the  first 


256  COMMEECIAL  LAW 

part;  or  in  case  of  a  stoppage  of  his  mines,  caused 
by  a  strike  among-  his  miners  or  other  employes,  the 
said  party  of  the  first  part  to  be  released  from  all 
obligation  to  furnish  coal  to  said  party  of  the  second 
part  during  such  suspension.  It  is  further 

agreed  that  the  said  party  of  the  first  part  will,  if 
required,  use  his  best  endeavors  to  purchase  some 
other  corresponding  grade  of  coal,  and  furnish  the 
same  to  the  said  party  of  the  second  part,  at  the 
lowest  market  price  at  which  it  can  be  obtained  by 
thesaidparty  of  the  first  part;  or  the  said  party  of 
the  second  part,  at  his  option,  may  secure  his  supply 
of  coal  elsewhere  during  the  suspension. 

Witness  our  hands  and  seals,  the  day  and  year 
first  above  written. 

Ritchie  Johnson,  [Seal.] 

John  D.  Hare.  [Seal.] 


APPENDIX  A  257 

Contract  For  Party-Wall. 

This  Agreement,  made  this  1st  day  of  July,  A.  D. 
19  ,  between  George  W.  West,  party  of  the  first 
part,  and  Claude  Houston,  party  of  the  second  part: 

Witnesseth,  That  Whereas,  the  said  George  W. 
West,  party  of  the  first  part,  is  seized  or  possessed 
of  a  certain  lot  or  piece  of  ground  in  the  City  of 
Chicago,  County  of  Cook,  and  State  of  Illinois,  and 
described  as  follows :  Lot  7,  Block  4,  in  D.  F.  Smith's 
Second  Addition  to  the  City  of  Chicago,  otherwise 
known  as  Number  17  Blank  Street  in  said  City,  and 
whereas  the  said  Claude  Houston,  party  of  the  second 
part,  is  seized  or  possessed  of  a  certain  lot  or  piece 
of  ground  in  said  City  and  described  as  follows :  Lot 
6,  Block  4,  in  D.  F.  Smith's  Second  Addition  to  Chi- 
cago, otherwise  known  as  Number  15  Blank  Street  in 
said  City,  which  is  adjoining  and  contiguous  to  the 
said  before  mentioned  and  described  lot  of  ground 
of  the  said  party  of  the  first  part;  and  whereas  it  is 
the  wish  of  the  said  party  of  the  first  part  and  the 
said  party  of  the  second  part,  that  a  party- wall,  eigh- 
teen inches  in  thickness  shall  be  built  between  them, 
one-half  of  which  is  to  stand  on  the  said  lot  of  the 
said  party  of  the  first  part,  and  the  other  half  on  the 
said  lot  of  the  said  party  of  the  second  part;  and 
whereas,  it  is  the  intention  of  the  said  party  of  the 
first  part  to  erect  a  building  on  his  said  lot  above 
described,  the  east  wall  of  which  is  to  be  used  as  a 
party- wall  by  the  said  parties  of  the  first  and  second 
parts. 

Now,    Therefore,    This    Indenture    Witnesseth: 

17 


258  COMMEECIAL  LAW 

That  it  is  hereby  mutually  agreed  by  the  said  parties, 
in  consideration  of  the  premises,  that  the  said  party 
of  the  first  part  may  so  build  and  erect  a  party-wall, 
eighteen  inches  in  thickness,  on  the  east  side  of  the 
said  lot  of  the  party  of  the  first  part,  that  the  center 
of  said  party-wall  shall  be  on  the  division  line  of  the 
said  lots  hereinbefore  mentioned,  of  the  said  parties 
of  the  first  and  second  parts,  respectively. 

And  Tliis  Indenture  Further  Witnesseth:  That 
the  said  party  of  the  first  part  does  hereby  covenant, 
promise,  grant  and  agree  that  the  said  party  of  the 
second  part,  his  heirs  and  assigns,  shall  and  may  at 
all  times  hereafter,  have  the  full  and  free  liberty  and 
privilege  of  joining  to  and  using  the  said  partition 
above  mentioned,  as  well  below  and  above  the  surface 
of  the  ground  and  along  the  whole  length  thereof,  any 
building  which  he  or  they  or  any  of  them  may  desire 
or  have  occasion  to  erect  on  the  said  lot  of  the  said 
party  of  the  second  part,  and  to  sink  the  joists  of 
such  building  or  buildings  into  the  said  partition  wall 
to  the  depth  of  six  inches,  and  no  further;  Provided, 
always,  nevertheless,  and  on  this  express  condition, 
that  the  said  party  of  the  second  part,  his  heirs  and 
assigns,  as  aforesaid,  before  proceeding  to  join  any 
building  to  the  said  partition  wall,  and  before 
making  any  use  thereof,  or  breaking  into  the  same, 
shall  pay  or  seciure  to  be  paid  unto  the  said  party  of 
the  first  pai't,  his  heirs  and  assigns  aforesaid,  the 
full  moiety  or  one-half  part  of  the  value  of  the  said 
party- wall,  or  so  much  thereof  as  shall  be  joined  to 
or  used  as  aforesaid,  which  value  shall  be  the  cost 
price  at  the  time  when  such  wall  is  to  be  used  by 
the  said  party  of  the  second  part,  as  fixed,  esti- 


APPENDIX  A  259 

mated  and  assessed  by  two  arbitrators,  one  of 
whom  shall  be  chosen  by  each  of  the  parties  to  this 
contract. 

And  it  is  further  agreed  by  and  between  the 
said  parties  that  further  of  the  above  parties, 
their  or  either  of  their  heirs  and  assigns,  shall  at 
any  time  hereafter  desire  to  build  a  barn  or  ex- 
tend the  wall  hereinbefore  mentioned,  the  party  so 
building  may  build  and  erect  such  wall  or  extension 
in  the  same  manner  as  above  specified,  and  the  other 
party  shall  have  the  same  liberty  and  privilege  of 
joining  and  using  such  wall  or  walls  so  built  and 
erected  as  aforesaid,  on  complying  with  the  same 
conditions  as  are  hereinbefore  required  by  the  said 
party  of  the  second  part,  as  the  manner  of  joining 
to  the  wall  above  mentioned  and  pajdng  for  the  same. 
And  the  said  parties  further  agree  and  covenant 
that,  if  it  shall  hereafter  become  necessary  to  repair 
or  rebuild  the  whole  or  any  portion  of  the  said  party- 
wall  or  walls,  the  expense  of  such  repairing  or  re- 
building shall  be  borne  equally  by  them,  theu^  re- 
spective heirs  and  assigns,  as  to  do  so  much  and  such 
portion  of  said  walls  as  the  said  parties,  their  heirs 
and  assigns,  shall  or  may  use  jointly. 

It  Is  Further  Mutually  Agreed,  Between  the  said 
parties,  that  this  agreement  shall  be  perpetual,  and 
at  all  times  be  construed  as  a  covenant  running  with 
the  land- 
In  Witness  Whereof,  the  said  parties  to  these 
presents  have  hereunto  set  their  hands  and  seals,  the 
day  and  year  first  above  written. 

George  W.  West,        [Seal.] 
Claude  Houston.         [Seal.] 


260  COMMEKCIAL  LAW 

Signed,  Sealed  and  Delivered  in  Presence  of 

William  Clarke. 
State  of  Illinois, 


County  of  Cook.    '^^^• 

I,  John  Zander,  a  Notary  Public  in  and  for  said 
County,  in  the  State  aforesaid,  Do  Hereby  Certif}^ 
That  Claude  Houston  and  George  W.  West,  person- 
ally known  to  me  to  be  the  same  persons  whose  names 
are  subscribed  to  the  foregoing  instrument,  appeared 
before  me  this  day  in  person,  and  acknowledged  that 
they  signed,  sealed  and  delivered  the  said  Instrument 
as  their  free  and  voluntary  act,  for  the  uses  and  pur- 
poses therein  set  forth. 

Given  imder  my  hand  and  notarial  seal,  this  1st 
day  of  July,  A.  D.,  19    .. 

Wilber  Hazen, 
Notary  Public. 


APPENDIX  A  261 

Contract  for  Warranty  Deed. 

Articles  of  Agreement,  Made  and  concluded  the 
27th  day  of  June,  in  the  year  of  our  Lord,  One  Thou- 
sand Nine  Hundred 

Between  Robert  Goelets,  party  of  the  first  part, 
and  Harry  Mann,  party  of  the  second  part. 

Witnesseth,  That  the  party  of  the  first  part,  at 
the  request  of  the  party  of  the  second  part,  and  in 
consideration  of  the  money  to  be  paid  and  the  cov- 
enants as  herein  expressed  to  be  performed  by  the 
party  of  the  second  part  (the  prompt  performance 
of  which  payments  and  covenants  being  a  condition 
precedent,  and  time  being  the  essence  of  said  condi- 
tion and  of  this  contract,  hereby  agrees  to  sell  to  the 
said  party  of  the  second  part  all  the  certain  lot  and 
parcel  of  land,  be  the  same  more  or  less,  situated  in 
the  City  of  Chicago,  County  of  Cook,  and  State  of 
Hlinois,  known  and  described  as  Lot  7,  in  Block  3, 
in  Walter  Jones*  Subdivision  of  the  east  quarter  of 
Section  numbered  seventeen  (17)  in  Township  num- 
bered 38  North,  Third  Range  East  of  the  Third  Prin- 
cipal Meridian  with  the  privileges  and  appurte- 
nances thereto  belonging. 

And  the  said  party  of  the  second  part  in  consid- 
eration of  the  premises,  hereby  agrees  to  pay  to  the 
said  party  of  the  first  part,  his  executors,  adminis- 
trators or  assigns,  at  the  office  of  the  said  Robert 
Goelets,  in  the  City  of  Chicago,  the  sum  of  three 
thousand  dollars,  in  manner  following,  to-wit:  One 
thousand  dollars  on  the  delivery  of  this  Contract, 
and  the  remainder  in  four  equal  payments,  the  first 


262  COMMERCIAL  LAW 

payment  to  be  made  on  the  first  day  of  January, 
A.  D.  19'  ,  with  interest  at  the  rate  of  six  per  cent, 
per  annum  from  the  date  hereof,  to  be  paid  on  the 
whole  sima  from  time  to  time  remaining  unpaid;  And 
Also  that  he  will  well  and  faithfully,  in  due  season, 
pay  and  discharge  all  taxes  and  assessments,  ordi- 
nary, extraordinaiy,  or  for  revenue  purposes, 
imposed  upon  said  premises,  or  any  part  thereof 
subsequent  to  Jime  27,  19  .  But  in  case  the  said 
party  of  the  second  part  shall  fail  to  pay  any  or  all 
such  taxes  or  assessments,  upon  said  premises  or 
appurtenances  or  any  part  thereof,  whenever  and  as 
soon  as  the  same  shall  pay  any  or  all  such  taxes  or 
assessments,  the  amounts  of  such  payments  so  made 
by  the  party  of  the  first  part  shall  immediately 
thereupon  become  an  additional  consideration  and 
payment  to  be  made  by  the  party  of  the  second  part 
hereto  for  the  premises  herein  described. 

And  the  said  party  of  the  second  part  further 
agrees,  that  in  case  he  shall  not  make  the  payments 
above  named,  or  any  part  thereof,  on  the  day  or  days 
they  are  respectively  made  payable,  he  will  pay 
interest  on  any  payment,  or  part  of  payment,  remain- 
ing unpaid  after  due,  at  the  rate  of  eight  per  cent. 
per  annum  until  paid;  but  neither  the  receipt  of  pay- 
ments or  parts  of  payments  after  due,  with  interest 
as  aforesaid,  nor  anything  herein  contained,  shall  be 
construed  as  a  waiver  of  the  right  of  the  said  party 
of  the  first  part  to  declare  this  Contract  forfeited  for 
nonpayment,  as  hereinafter  provided. 

And  the  party  of  the  second  part  hereby  cov- 
enants and  agrees  to  and  with  the  party  of  the  first 
part,  that  when  a  building  is  erected  upon  the  said 


APPENDIX  A  863 

lot  herein  described,  it  shall  be  for  a  private  dwelling 
house  only,  to  cost  not  less  than  five  thousand  dol- 
lars. And  the  party  of  the  second  part  hereby  cov- 
enants to  and  with  the  party  of  the  first  part,  that  all 
buildings,  erections  and  improvements  now  upon  or 
hereafter  to  be  placed  upon  said  premises  shall  stand 
as  security  for  the  payment  of  the  sums  to  be  paid 
for  the  said  land,  and  shall  not  be  removed  from  said 
premises  without  the  written  consent  of  the  party  of 
the  first  part.  And  if  any  suit  at  law  or  in  equity 
shall  be  commenced  to  enforce  payment  for  work  or 
material  for  any  building  that  may  be  created  upon 
said  premises,  or  against  the  said  party  of  the  sec- 
ond part,  for  any  alleged  indebtedness,  and  said  party 
of  the  first  part  shall  be  made  a  party  thereto,  then 
and  in  that  case  he  may  add  to  the  consideration  of 
this  Contract  all  expenses  necessarily  incurred  by 
him  in  that  behalf;  and  collect  the  same  at  once,  with 
interest  thereon  at  the  rate  of  eight  per  cent,  per 
annum. 

And  the  said  party  of  the  first  part  further  cov- 
enants and  agrees  with  the  said  party  of  the  second 
part,  that  upon  the  full  payment  of  the  purchase 
money,  taxes  and  interest,  as  aforesaid,  and  upon  the 
faithful  performance  of  all  the  obligations  of  this 
Agreement,  on  the  part  of  the  party  of  the  second 

part  to  be  fulfilled, the  said  party 

of  the  first  part,  shall  and  will,  without  delay,  well 
and  faithfully  execute,  acknowledge  and  deliver  in 
person,  or  by  attorney  duly  authorized,  to  the  party 
of  the  second  part  a  good  and  sufficient  deed  or  con- 
veyance of  the  above  described  premises,  with  their 


264  COMMERCIAL  LAW 

appurtenances,  with  covenants  of  warranty,  to  be 
delivered  on  surrender  of  the  duplicate  Contract. 

And  it  is  Mutually  Covenanted  and  Agreed,  By 
and  betewen  the  parties  hereto,  that  in  case  default 
shall  be  made  for  the  space  of  thirty  days  in  any  pay- 
ment, or  any  part  thereof,  or  in  any  of  the  conditions 
herein  stipulated  to  be  perfoimed  by  the  party  of 
the  second  part,  it  shall  and  may  be  lawful  for  the 
party  of  the  first  part,  if  he  sees  fit,  to  declare  this 
Contract  void,  without  notice  to  said  party  of  the 
second  part,  and  to  re-enter  upon  the  said  premises 
at  any  time  after  such  default,  without  serving  on 
the  party  of  the  second  part,  or  other  person  holding 
under  him  or  them  a  notice  to  quit  said  land.  And 
in  case  this  Contract  shall  be  so  declared  void,  the 
party  of  the  second  part  shall  be  thenceforth  deemed 
a  mere  tenant  at  will  under  the  said  party  of  the  first 
part,  and  be  liable  to  be  proceeded  against  without 
notice  to  quit,  under  the  provisions  of  an  Act  regu- 
lating proceedings  in  cases  of  forcible  entry  and 
detainer,  and  the  Acts  amending  the  same.  And 
the  party  of  the  first  part,  in  case  he  shall  declare 
this  Contract  void,  shall  be  at  liberty  to  sell  the  land 
to  any  person  or  persons  whomsoever,  without  being 
liable  in  law  or  equity  to  the  party  of  the  second  part, 

or  any  person  claiming  under , 

for  any  damage  in  consequence  of  such  sale,  or  to 
restore  any  payment  made  on  account  of  this  Con- 
tract; and  payments  that  shall  have  been  made  upon 
or  under  this  Contract  shall  be  forfeited  to  said  party 
of  the  first  part,  and  may  be  held  by  the  party  of  the 
first  part  as  stipulated  damages  for  the  non-perform- 
ance of  this  Contract.    And  said  party  of  the  first 


APPENDIX  A  265 

part  shall  have  a  right  to  recover  all  damages  sus- 
tained bj  reason  of  the  holding  over  of  said  party 
without  permission. 

And  it  is  Further  Agreed,  That  no  sale,  transfer, 
assignment  or  pledge  of  this  contract  shall  be  in  any 
manner  binding  upon  the  party  of  the  fii'st  part, 
unless  he  first  consent  in  writing  thereon  to  such  sale, 
transfer,  assignment  or  pledge,  and  that  in  case  this 
Contract  shall  be  recorded  he  shall  deed  only  to  the 
party  of  the  second  part  hereto. 

Li  Witness  Whereof,  The  said  parties  have  here- 
unto set  their  hands  and  seals  the  day  and  year  first 
above  written. 

Robert  Goelets,  [Seal.] 

Harry  Mann.  [Seal.] 


see  COMMEECIAL  LAW 

Articles  of  Agreement — Long  Form. 

Articles  of  Agreement,  made  this  20tli  day  of 
June  in  the  year  One  Thousand  Nine  Hundred  and 

Between  Philip  T.  Cowger  of  Chicago  in  the 
County  of  Cook,  and  State  of  Illinois,  of  the  First 
Part,  and  Thomas  Cowley  of  Chicago,  in  the  County 
of  Cook,  and  State  of  Illinois,  of  the  Second  Part. 

First, — The  said  party  of  the  second  part  does 
hereby  for  his  heirs,  executors  and  administrators, 
covenant,  promise  and  agree  to  and  with  the  said 
party  of  the  first  part,  his  heir,  executors  or  adminis- 
trators, or  assigns,  that  he,  the  said  party  of  the 
second  part,  his  heirs,  executors  or  administrators, 
shall  and  will,  for  the  consideration  hereinafter  men- 
tioned, on  or  before  the  1st  day  of  October,  A.  D. 
19  ,  well  and  sufficiently  erect  and  finish  the  new 
three-story,  six-flat  building,  to  be  erected  on  lot  7, 
block  2,  in  E.  A.  Dunn's  subdivision  of  the  northeast 
quarter  of  the  northwest  quarter  of  section  18,  town- 
ship 37  north,  range  14  east  of  the  third  principal 
meridian,  in  the  City  of  Chicago,  agreeably  to  the 
Drawings  and  Specifications  made  by  J.  W.  White, 
and  signed  by  the  said  parties  and  hereunto  an- 
nexed and  made  part  of  this  agreement,  within  the 
time  aforesaid,  in  a  good  workmanlike  manner,  to  the 
satisfaction  and  under  the  direction  of  the  said  J.  W. 
White,  to  be  testified  by  a  writing  or  certificate  under 
the  hand  of  the  said  J.  W.  White,  and  also  shall  and 
will  find  and  provide  such  good  and  sufficient  mate- 
rials of  all  kinds  whatsoever,  as  shall  be  proper  and 


APPENDIX  A  267 

sufficient  for  the  completing  and  finishing  of  the  said 
building  mentioned  in  the  said  specifications  for  the 
sum  of  six  thousand  dollars,  payable  one-third  when 
the  walls  are  plastered,  one-third  upon  completion  of 
the  building,  and  one-third  thirty  days  after  the  date 
of  said  completion. 

And  the  said  party  of  the  first  part  does  hereby, 
for  himself  or  his  heirs,  executors,  and  adminis- 
trators, covenant,  promise,  and  agree  to,  and  with  the 
said  party  of  the  second  part  his  executors  and 
administrators,  that  he  the  said  party  of  the  first 
part,  his  executors  or  administrators,  shall,  and  will, 
in  consideration  of  the  covenants  and  agreements 
being  strictly  performed  and  kept  by  the  said  party 
of  the  second  part,  as  specified,  well  and  truly  pay, 
or  cause  to  be  jjaid,  unto  the  said  party  of  the  second 
part,  his  executors,  administrators,  or  assigns,  the 
sum  of  six  thousand  dollai-s,  lawful  money  of  the 
United  States  of  America,  in  manner  following:  One- 
third  when  the  walls  are  plastered,  one-third  upon 
completion  of  the  building  and  one-third,  thirty  days 
after  the  date  of  the  said  completion. 

And  the  said  party  of  the  first  part  does  hereby, 
for  himself  or  his  heirs,  executors  and  administrators, 
covenant,  promise  and  agree  to,  and  with  the  said 
party  of  the  second  part  his  executors  and  adminis- 
trators, that  he  the  said  party  of  the  first  part,  his 
executors  or  administrators,  shall,  and  will,  in  con- 
sideration of  the  covenants  and  agreements  being 
strictly  performed  and  kept  by  the  said  party  of  the 
second  part,  as  specified,  well  and  truly  pay,  or  cause 
to  be  paid,  unto  the  said  party  of  the  second  part, 
his  executors,  administrators,  or  assigns,  the  smn  of 


268  COMMERCIAL  LAW 

six  thousand  dollars,  lawful  money  of  the  United 
States  of  America,  in  manner  following:  one-third 
when  the  walls  are  plastered,  one-third  upon  comple- 
tion of  the  building,  and  one-third  thirty  days  after 
the  date  of  the  said  completion. 

Provided,  That  in  each  of  the  said  cases  a  cer- 
tificate shall  be  obtained  and  signed  by  the  said 


And  it  is  Hereby  Further  Agreed  by  and  Between 
the  Said  Parties: 

First, — The  Specifications  and  the  Drawings  are 
intended  to  cooperate,  so  that  any  works  exhibited 
in  the  Drawings,  and  not  mentioned  in  the  specifica- 
tions, or  vice  versa,  are  to  be  executed  the  same  as  if 
it  were  mentioned  in  the  Specifications  and  set  forth 
in  the  Drawings,  to  the  true  meaning  and  intention 
of  the  said  Drawings  and  Specifications,  without  any 
extra  charge  whatsoever. 

Second, — The  contractor,  at  his  own  proper  cost 
and  charges,  is  to  provide,  all  manner  of  materials 
and  labor,  scaffolding,  implements,  moulds,  models 
and  cartage  of  every  description,  for  the  due  perform- 
ance of  the  several  erections. 

Third, — Should  the  owner  at  any  time  during  the 
progress  of  the  said  building  request  any  alteration, 
deviation,  additions  or  omissions,  from  the  said  con- 
tract, same  will  be  made,  but  will  be  added  or  de- 
ducted from  the  amount  of  the  contract,  as  the  case 
may  be,  by  a  fair  and  reasonable  valuation. 

Fourth, — Should  the  contractor,  at  any  time  dur- 
ing the  progress  of  the  said  works,  refuse  or  neglect 
to  supply  a  sufficiency  of  materials  or  workmen,  the 
owner  shall  have  the  power  to  provide  materials  and 


APPENDIX  A  269 

workmen  after  three  days'  notice  in  writing  being 
given,  to  finish  the  said  works,  and  the  expense  shall 
be  deducted  from  the  amount  of  the  contract. 

Pifth, — Should  any  dispute  arise  respecting  the 
true  construction  or  meaning  of  the  Drawings  or 
Specifications,  the  same  shall  be  decided  by  J.  W. 
White  and  his  decision  shall  be  final  and  conclusive; 
but  should  any  dispute  arise  respecting  the  true  value 
of  the  extra  work,  or  of  the  works  omitted,  the  same 
shall  be  valued  by  two  competent  persons, — one  em- 
ployed by  the  owner,  and  the  other  by  the  contractor, 
— and  these  two  shall  have  power  to  name  an  umpire, 
whose  decision  shall  be  binding  on  all  parties. 

Sixth, — The  owner  shall  not,  in  any  manner,  be 
answerable,  or  accountable  for  any  loss  or  damage 
that  shall  or  may  happen  to  the  said  works,  or  any 
part  or  parts  thereof  respectively,  or  for  any  of  the 
materials  or  other  things  used  and  employed  in  fin- 
ishing and  completing  the  same  (loss  or  damage  by 
fire  excepted). 

Seventh, — No  extra  w^ork  or  materials  will  be 
paid  for  without  a  written  agreement  made  and  ap- 
proved by  the  architect  or  owner. 

Eighth, — The  contractor  will  be  held  responsible 
for  all  violations  of  city  ordinances,  caused  by  ob- 
structing the  street,  with  his  materials  or  otherwise, 
and  is  to  hold  the  owner  harmless  from  all  damages 
or  expense  arising  therefrom. 

He  will  also  be  responsible  for  all  damages  to  any 
person  or  persons  employed  in  the  building  or  other- 
wise, resulting  from  his  neglect  or  lack  of  proper 
caution  in  the  performance  of  his  contract,  and  he 
must  keep  a  competent  man  at  the  works,  at  all  thoaes. 


270  COMMERCIAL  LAW 

during  working  hours,  to  receive  instructions  from 

the  architect  or  superintendent. 

In  Witness  Whereof,  The  said  parties  to  these 

presents  have  hereunto  set  their  hands  and  seals, 

the  day  and  year  above  written. 

Philip  T.  Cowger,  [Seal.] 

Thomas  Crowley.  [Seal.] 


APPENDIX  A  271 

Building  Contract — Short  Form. 

Building  Contract,  Made  this  20th  day  of  June, 
One  Thousand  Nine  Hundred  and  ,  by  and  be- 

tween George  Beady  of  Chicago,  County  of  Cook, 
and  State  of  Illinois,  of  the  First  Part,  and  Henry 
Grosscup  of  Chicago,  County  of  Cook,  and  State  of 
Illinois,  party  of  the  second  part  in  these  words,  to- 
wdt :  The  said  party  of  the  second  part  covenant  and 
agrees  to  and  with  the  said  party  of  the  first  part,  to 
provide  at  his  own  expense,  all  the  materials  neces- 
sary, and  to  make,  erect,  build  and  complete,  in  a 
good,  substantial  and  workmanlike  manner,  the 
three  story  six-flat  building  to  be  erected  on  Lot  7, 
Block  2,  in  E.  A.  Smith's  subdi\dsion,  of  the  north- 
east quarter  of  the  northwest  quarter  of  section  18, 
township  37  north,  range  14,  east  of  the  third  prin- 
cipal meridian,  in  the  City  of  Chicago,  agreeably  to 
the  draft  plans,  explanations,  and  specifications 
hereto  annexed,  of  good  and  substantial  materials, 
and  to  deliver  the  said  building  to  the  said  party 
of  the  first  part  complete  finished  and  ready  for  oc- 
cupancy on  the  1st  day  of  October,  A.  D.  19  ,  next. 
And  the  said  party  of  the  first  part  covenants  and 
agrees  to  pay  unto  the  said  party  of  the  second 
part,  for  the  same,  the  sum  of  six  thousand  dollars, 
law^il  money  of  the  United  States,  as  follows,  one- 
thiiYl  when  the  walls  are  plastered,  one-third  upon 
completion  of  the  building,  and  one-third  thirty  days 
after  the  date  of  said  completion,  and  for  the  true 
and  faithful  performance  of  all  and  every  of  the 
covenants  and  agreemetits  above  mentioned,  the  par- 


272  COMMERCIAL  LAW 

ties  of  these  presents  bind  themselves  each  unto  the 

other,  in  the  penal  sum  of 

Dollars,  as  fixed  and  liquidated  damages,  to  be  paid 

by  the  failing  or  defaulting  party. 

In  Witness  Whereof,  The  parties  to  these  presents 

have  hereunto  set  their  hands  and  seals,  the  day  and 

year  first  above  written. 

Sealed  and  delivered  in  the  presence  of 

[Seal.] 

[Seal.] 

[Seal.] 


APPENDIX  A  273 

Short  Blank. — General  Form  of  Contract. 

Contract,  Made  and  concluded  the day 

of One  Thousand  Nine  Hundred 

and by  and  between 

of  the  County  of and  State 

of ,  party  of  the  first  part, 

and of  the 

of County  of 

,  party  of  the  second  part,  in 

these  words:  The  said  party  of  the  second  part 
covenant  and  agree  to  and  with  the  said  party  of 
the  first  part,  to 

And  the  ^aid  party  of  the  first  part  covenants  and 
agrees  to  pay  unto  the  said  party  of  the  second  part, 

for  the  same,  the  sum  of 

dollars,  lawful  money  of  the  United  States,  as  fol- 
lows :  the  sum  of ,  and  for 

the  true  and  faithful  performance  of  all  and  every 
of  the  covenants  and  agreements  above  mentioned, 
the  parties  of  these  presents  bind  themselves  each 

unto  the  other  in  the  penal  sum  of 

dollars,  as  fixed  and  liquidated  damages  to  be  paid 
by  the  failing  party. 

In  Witness  Whereof,  The  parties  to  these  pres- 
ents have  hereunto  set  their  hands  and  seals  the  day 
and  year  first  above  written. 

Sealed  and  delivered  in  the  presence  of 

[Seal.] 

[Seal.] 

[Seal.] 

18 


274  COMMEECIAL  LAW 

Real  Estate  Sale  Contract. 

This  Memorandum  Witnesseth,  That  Edwin  D. 
Clarkson  hereby  agrees  to  Sell,  and  William  R.  Beem 
agrees  to  Purchase,  at  the  price  of  three  thousand 
dollars,  the  following  described  real  estate,  situated 
in  Cook  County,  Illinois,  lot  7,  Block  2,  in  E.  A. 
Smith's  subdivision  of  the  northeast  quarter  of  the 
northwest  quarter  of  section  18,  township  37  north, 
range  14,  east  of  the  third  principal  meridian  in  the 
City  of  Chicago.  Subject  to  (1)  existing  leases,  ex- 
piring May  1,  19  ,  the  purchasee  to  be  entitled  to 
the  rents,  if  any,  from  the  time  of  delivery  of  Deed; 
(2)  all  taxes  and  assessments  levied  after  the  year 
1908,  (3)  any  unpaid  special  taxes  or  assessments 
levied  for  improvements  not  yet  made;  also  subject 
to  first  mortgage  for  four  thousand  dollars  in  favor 
of  John  G.  Walker,  due  August  13, 19  ,  and  bearing 
interest  at  the  rate  of  six  per  cent  per  annum. 

Said  purchaser  has  paid  five  hundred  dollars,  as 
earnest  money,  to  be  applied  on  said  purchase  when 
consummated,  and  agrees  to  pay,  within  five  days 
after  the  title  has  been  examined  and  found  good, 
the  further  sum  of  five  hundred  dollars,  at  the  office 
of  W.  E.  Smith,  Chicago,  provided  a  good  and  suffi- 
cient Warranty  Deed,  conveying  to  said  purchaser 
a  good  title  to  said  premises  with  waiver  and  con- 
veyance of  any  and  all  estates  of  homestead  therein 
and  all  rights  of  dower  in  inchoate  or  otherwise  (sub- 
ject as  aforesaid)  shall  then  be  ready  for  delivery. 
The  balance  to  be  paid  as  follows:  One  thousand 
dollars  July  1, 19    ,  and  one  thousand  dollars  July  1, 


APPENDIX  A  276 

19  ,  with  interest  at  the  rate  of  six  per  cent  per 
annum  payable  semiannually,  to  be  secured  by  notes 
and  mortgage,  or  trust  deed,  of  even  date  herewith, 
on  said  premises,  in  the  form  ordinarily  used.  A 
certificate  of  title  issued  by  the  registrar  of  titles 
of  Cook  County  or  a  complete  merchantable  abstract 
of  title,  or  a  merchantable  copy  brought  down  to 
date,  or  a  merchantable  title  guaranty  policy  to  be 
furnished  within  a  reasonable  time.  In  case  the  title, 
upon  examination,  is  found  materially  defective, 
within  ten  days  after  said  abstract  is  furnished,  then, 
unless  the  material  defects  are  cured  within  sixty 
days  after  written  notice  thereof,  the  said  earnest 
money  shall  be  refunded  and  this  contract  is  to  be- 
come inoperative. 

Should  said  purchaser  fail  to  perform  this  con- 
tract promptly  on  his  part,  at  the  time  and  in  the 
manner  therein  specified,  the  earnest  money  paid  as 
above  shall,  at  the  option  of  the  vendor,  be  forfeited 
as  liquidated,  including  commissions  payable  by  ven- 
dor, and  this  contract  shall  be  and  become  null  and 
void.  This  is  of  the  essence  of  this  contract,  and  of 
all  the  conditions  thereof. 

This  contract  and  the  said  earnest  money  shall 
be  held  by  W.  E.  Smith  for  the  mutual  benefit  of 
the  parties  hereto. 

In  Testimony  Whereof,  said  parties  hereto  set 
their  hands  and  seals  this  20th  day  of  June,  A.  D. 
19    . 

Edwin  D.  Clarkson,       [Seal.] 
William  R.  Beem.  [Seal.] 


APPENDIX  B. 
FORMS  IN  BANKRUPTCY. 

Form  No.  1.-— Debtor's  Petition. 

To  the  Honorable , 

Judge  of  the  District  Court  of  the  United  States, 
for  the District  of : 

The  petition  of ,  of 

,  in  the  County  of , 

and  District  and  State  of , , 

(state  occupation),  respectfully  represents: 

That  he  has  had  his  principal  place  of  business 
(or  has  resided,  or  has  had  his  domicile)  for  the 
greater  portion  of  six  months  next  immediately  pre- 
ceding the  filing  of  this  petition  at , 

within  said  judicial  district;  that  he  owes  debts  which 
he  is  unable  to  pay  in  full;  that  he  is  willing  to  sur- 
render all  his  property  for  the  benefit  of  his  cred- 
itors except  such  as  is  exempt  by  law,  and  desires 
to  obtain  the  benefit  of  the  Acts  of  Congress  relating 
to  bankruptcy. 

That  the  schedule  hereto  annexed,  marked  A,  and 
verified  by  your  petitioner's  oath,  contains  a  full  and 
true  statement  of  all  his  debts,  and  (so  far  as  it  is 
possible  to  ascertain)  the  names  and  places  of  resi- 
dence of  his  creditoi-s,  and  such  further  statements 
concerning  said  debts  as  are  required  by  the  pro- 
visions of  said  Acts: 

277 


378  COMMERCIAL  LAW 

That  the  schedule  hereto  annexed,  marked  B,  and 
verified  by  your  petitioner's  oath,  contains  an  ac- 
curate inventory  of  all  his  property,  both  real  and 
personal,  and  such  further  statements  concerning 
said  property  as  are  required  by  the  provisions  of 
said  Acts: 

Wherefore  your  petitioner  prays  that  he  may  be 
adjudged  by  the  coiu^t  to  be  a  bankrupt  within  the 
pm'view  of  said  acts. 


,  Attorney. 

United  States  of  America,^ 
District  of j  ®^* 

I,  ,  the  petitioning 

debtor  mentioned  aiid  described  in  the  foregoing 
petition,  do  hereby  make  solemn  oath  that  the  state- 
ments contained  therein  are  true  according  to  tne 
best  of  my  knowledge,  information,  and  belief. 


Petitioner. 

Subscribed  and  sworn  to  before  me  this day 

of A.  D 


(Official  chai'acter.) 


APPENDIX  B 


279 


SCHEDULE  A.— STATEMENT  OF  ALL  DEBTS 
OF  BANKRUPTCY. 

Schedule  A  .(1). 

Statement  of  All  Creditors  Who  are  to  be  Paid  in 
Full,  or  to  Whom  Priority  is  Secured  by  Law. 


Claims  which 
hare  priority. 

Reference 

to  ledger 

or  voucher. 

Names  of 
Creditor. 

Residence 
(if  un- 
known. 

that  fact 
must  be 
stated). 

Where  and 
when  con- 
tracted. 

Natureand 
considera- 
tion of  the 
debt  and 

whether 
contracted 
as  partner 

or  joint 

contractor 

and  if  so, 

with  whom 

Amount. 

(1) 
Taxes  and  debts 
due  and  owing  to 
the  United  States. 

% 

c. 

(2) 

Taxes    due   and 

owing  to  the  State 

of 

or  to  any  county, 
district,  or  munic- 
ipality thereof. 

(3) 
Wages  due  work- 
m  e  n,     clerks,    or 
servants,     to    an 
amount    not    ex- 
ceeding J300  each, 
etimed      within 
three  months  be- 
fore filing  the  pe- 
tition. 

(4) 
Other  debts  hav- 

Total 

ing    priority    b  y 
li^w. 

Petitioner. 


280 


COMMERCIAL  LAW 


Schedule  A  (2). 

Creditors  Holding  Securities. 

(N.  B. — Particulars  of  securities  held,  with  dates 
of  same,  and  when  they  were  given,  to  be  stated 
under  the  names  of  the  several  creditors,  and  also 
particulars  concerning  each  debt,  as  required  by  Acts 
of  Congress,  relating  to  bankruptcy,  and  whether 
contracted  as  partner  or  joint  contractor  with  any 
other  person;  and  if  so,  with  whom.) 


Reference 

to  ledger  or 

voucher. 

Names 

of  cred- 

itord. 

Resi- 
dences   (if 
unknown 
that  fact 
must  be 
Stated). 

Descrip- 
tion of 
securities. 

When   and 

where 
debts  were 
contracted 

Value  of 
securities 

Amount  of 
debts. 

Total 

S 

c. 

$ 

c. 

Petitioner. 


APPENDIX  B 


281 


Schedule  A  (3). 

Creditors  Whose  Claims  are  Unsecured. 

(N.  B. — ^When  the  name  and  residence  (or  either) 
of  any  di'awer,  maker,  indorser,  or  holder  of  any  bill 
or  note,  etc.,  are  unknown,  the  fact  must  be  stated, 
and  also  the  name  and  residence  of  the  last  holder 
known  to  the  debtor.  The  debt  due  to  each  creditor 
must  be  stated  in  full,  and  any  claim  by  way  of  set-off 
stated  in  the  schedule  of  property.) 


Refer- 
ence to 
ledger  or 
▼oacher. 


Names  of 
Creditors. 


Residence,  (if 

unknown,  that 

fact  mnst  be 

stated). 


When  and 

where 
contracted. 


Nature  and  con- 
sideration of  the 
debt,  and  whether 
any  judgment,  bond 
bill  of  exchange, 
promissory  notes, 
etc.,  and  whether 
contracted  as  part- 
ner or  joint  con- 
tractor with  any 
other  person;  and 
if  so,  with  whom- 


Total 


Amount. 


Petitioner. 


2&2 


COMMIMCIAL  LAW 


Sehedule  A  (3). 

Liabilities  on  Notes  or  Bills  Discounted  Which  Ought 

to  be  Paid  by  the  Drawers,  Makers,  Acceptors, 

or  Indorsers. 

(The  dates  of  the  notes  or  bills,  and  when  due, 
with  the  names,  residences,  and  the  business  or  occu- 
pation of  the  drawers,  makers,  or  acceptors  thereof, 
are  to  be  set  forth  under  the  names  of  the  holders. 
If  the  names  of  the  holders  are  not  known,  the  name 
of  the  last  holder  known  to  the  debtor  shall  be  stated, 
and  his  business  and  place  of  residence.  The  same 
particulars  as  to  notes  or  bills  on  which  the  debtor 
is  liable  as  indorser.) 


Refer- 
ence to 
ledger  or 
voucher 

Names  of 

holders  as  far 

as   known. 

Residence 

(if  unknown 

that  fact  must 

be  stated). 

Place  where 
contracted. 

Nature  of  liability, 
whether  same  was 
contracted  as  part- 
ner or  joint  con- 
tractor, or  with  any 
other  person;  if  so, 
with  whom. 

Amount. 

Total 

1 

c. 

Petitioner. 


APPENDIX  B 


283 


Sehedule  A  (5). 

Accomodation  Paper. 

(N.  B. — The  dates  of  the  notes  or  bills,  and  when 
due,  with  the  names  and  residences  of  the  drawers, 
niakei's,  and  acceptors  thereof,  are  to  be  set  forth 
under  the  names  of  the  holders;  if  the  bankrupt  is 
liable  as  a  drawer,  maker,  acceptor,  or  indorser  there- 
of, it  is  to  be  stated  accordingly.  If  the  names  of 
the  holders  are  not  known,  the  name  of  the  last 
holder  known  to  the  debtor  should  be  stated,  with  his 
residence.  Same  particulars  as  to  other  commercial 
paper.) 


Reference 

to  ledger  or 

voucher. 

Names  of 
holders. 

Residences 

(if  unknown 

that  fact 

must  be 

BUted). 

Names  and 
residence  of 

persons  ac- 
commodated 

Place  where 
contracted. 

Whether  lia- 
bility was 
contracted 

as  partner  or 
joint  con- 
tractor, or 
with  any 

other  person, 
and.  if  so. 
with  whom. 

Amount. 

Total 

$ 

c. 

Petitioner. 


284  COMMERCIAL  LAW 

Oath  to  Schedule  A. 

United  States  of  America, 


District  of  ''^^* 

On  this day  of ,  A.  D. 

. . . . ,  before  me  personally  came 

the  person  mentioned  in  and  who  subscribed  to  the 
foregoing  schedule,  and  who,  being  by  me  first  duly 
sworn,  did  declare  the  said  schedule  to  be  a  state- 
ment of  all  his  debts,  in  accordance  with  the  Acts 
of  Congress  relating  to  bankruptcy. 

Subscribed  and  sworn  to  before  me,  this 

day  of ,  A.  D 


(Official  character.) 


APPENDIX  B 


285 


SCHEDULE  B,— STATEMENT  OP  ALL  PROP. 
ERTY  OF  BANKRUPT. 

Schedule  B  (1). 

Real  Estate. 


Location  and  description  of  all  Real 
Estate  owned  or  held  by  him. 


Incumbrances 

thereon. if  any 

and  dates 

thereof. 


Statement  of 
Particulars  re 
lating  thereto 


Total 


Estimated 
value. 


Petitioner. 


286 


COMMERCIAL  LAW 


Schedule  B  (2). 
Personal  Property. 


a. — Cash    on   hand 

b. — Bills  of  exchange,  promissory  notes,  or 
securities  of  any  description  (each  to  be 
set  out  separately) 


c. — Stock  In  trade.   In 

at ,  of  the  value  of- 


-bnalness  of- 


d. — Household  goods  and  fnrniture,  household 
stores,  wearing  apparel  and  ornaments  of 
the    person,    yiz  : 

e. — Books,  prints,  and  pictures,  viz : 

f. — Horses,  cows,  sheep  and  other  animals 
(with  number   of  each)    viz: 

g. — Carriages   and   other   vehicles,    viz : 


h. — Farming  stock  and  Implements  of  hus- 
bandry,  viz :    

I. — Shipping,  and  shares  in  vessels,   viz  : . . . . 

k. — Machinery,  fixtures,  apparatus,  and  tools 
used  in  business,  v;ith  the  place  where 
each    Is  situated,   viz :    

1. — Patents,  copyrights,  and  trade-marks,  viz : 

m. — Goods,  or  personal  property  of  any  other 
description   with   the   place   where   each   is 


situated,    viz ; 


Petitioner. 


APPENDIX  B 


287 


Schedule  B  (3). 
Choses  in  Action. 


Cents 


a. — Debts  dne  petitioner  on  open  account — . 

b. — Stocks  In  incorporated  companies,  interest 
in  joint  stock  companies,  aud  negotiable 
bonds    


c. — Policies   of   insurance    

d. — Unliquidated   claims  of  every  nature,   with 
their  estimated  value   

e. — Deposits   of  money  In  banking  Instltntlons 
and    elsewhere    


Petitioner. 


288 


COMMERCIAL  LAW 


Schedule  B  (4). 
Property  in  Reversion,  Remainder,  or  Expectancy, 
Including  Property  Held  in  Trust  for  the  Debtor 
or  Subject  to  Any  Power  or  Right  to  Dis- 
pose of  or  to  Charge. 
(N.  B. — A  particular  description  of  each  interest 
must  be  entered.    If  all  or  any  of  the  debtor's  prop- 
erty has  been  conveyed  by  deed,  of  assignment,  or 
otherwise,  for  the  benefit  of  creditors,  the  date  of 
such  deed  should  be  stated,  the  name  and  address 
of  the  person  to  whom  the  property  was  conveyed, 
the  amount  realized  from  the  proceeds  thereof,  and 
the  disposal  of  same,  as  far  as  known  to  the  debtor.) 


General  Interest. 

Particular  de:criDtion, 

Supposed  Value 
•f  My  Interest. 

Interest   In  land 

Total 

TOtlkl 

t 

c. 

Personal  property 

Property    In    money,    stock,    shares, 
bonds,   annuities,   etc 

Rights,     and    powers,     legacies    and 

bequests     

Property     heretofore     conveyed     for 
benefit   of   creditors    

Ajmount      real- 
ized from   pro- 
ceeds  of   prop- 

What   portion    of    debtor's    property 
has    been    conveyed    by    deed    of    an 
assignment,  or  otherwise,  for  benefit 
of  creditors ;  date  of  such  deed,  name 
and  address  of  party  to  whom  con- 
veyed ;    amount    realized    therefrom, 
and    disposal    of    same,    so    far    as 

erty    conveyed. 

S 

c. 

What  sum  or  sums  have  been  paid  to 
counsel,   and   to   whom,   for   services 
rendered   or   to   be   rendered   In   this 

Petitioner. 


APPENDIX  B 


289 


Schedule  B  (5). 

A  particular  statement  of  the  property  claimed 
as  exempted  from  the  operation  of  the  Acts  of  Con- 
gress relating  to  bankruptcy,  giving  each  item  of 
property  and  its  valuation;  and,  if,  any  portion  of 
it  is  real  estate,  its  location,  description,  and  present 
use. 


Total 

Valuation, 

Military   uniform,    artas,   and   equip- 

% 

c. 

Property  claimed  to  be  exempted  by 
State     laws ;     its     description     and 
present  use ;   and  reference  given  to 
the  statute  of  the  State  of  the  State 
creating  the  exemption 

Petitioner. 


19 


290 


COMMERCIAL  LAW 


Schedule  B  (6). 

Books,  Papers,  Deeds,  and  Writings  Relating  to 
Bankrupt's  Business  and  Estate. 

The  following  is  a  true  list  of  all  books,  papers, 
deeds,  and  writings  relating  to  my  trade,  business, 
dealings,  estate  and  effects,  or  any  part  thereof, 
which,  at  the  date  of  this  petition,  are  in  my  posses- 
sion or  under  my  custody  and  control,  or  which  are 
in  the  possession  or  custody  of  any  person  in  trust 
for  me,  or  for  my  use,  benefit,  or  advantage;  and 
also  of  all  others  which  have  been  heretofore,  at  any 
time  in  my  possession,  or  under  my  custody  or  con- 
trol, and  which  are  now  held  by  the  parties  whose 
names  are  hereinafter  set  forth,  with  the  reason  for 
their  custody  of  the  same. 


Books 


Deeds 


Papers 


Petitioner. 


APPENDIX  B 


391 


Summary  of  Debts  and  Assets. 

(From  the  Statements  of  the  Bankrupt  in  Schedules 

A.  and  B.) 


dne 


Schedule  A.  1.   (1)   Taxes       and      debts 

United    States    

"  "  1.  (2)  Taxes  due  States,  conn- 
ties,  districts,  and  munici- 
palities     

"    1.   (3)    Wages    

"    1.   (4)   Other    debts    preferred    by 

law     

"    2.  Secured    claims    

"         "    3.  Unsecured    claims 

"         "    4.  Notes      and      bills      which 

ought  to  be  paid  by  other 

parties    thereto 

"         "    5,  Accommodation    paper.... 


Schedule  A.  total. 


Schedule  B.  1.      Real    estate 

'•    2-a  Cash   on   hand 

"  2-b  Bills,  promissory  notes,  and 
securities     

"    2-c  Stock  in  trade 

"    2-d  Household  goods,  etc 

"    2-e  Books,  prints,  and  pictures... 

"  2-f  Horses,  cows,  and  other  ani- 
mals      

"    2-g  Carriages  and  other  vehicles.. 

"  2-h  Farming  stock  and  Imple- 
ments      

"  2-1  Shipping  and  shares  in  ves- 
sels      

"  2-k  Machinery,    tools,    etc 

"  2-1  Patents,  copyrights  and  trade- 
marks     

"    2-m  Other  personal   property 

"    3-a  Debts  due  on  open  accounts.  . 

"    3-b  Stocks,  negotiable  bonds,  etc.. 

"    3-c  Policies  of   insurance 

"    3-d  Unliquidated   claims 

"  3-e  Deposits  of  money  in  banks 
and    elsewhere 

"  4  Property  In  reversion,  remain- 
der,  trust,  etc 

"  5  Property  claimed  to  be  ex- 
cepted     

"    6      Books,  deeds,   and  papers.... 

Schedule  B.  total 


292  COMMERCIAL  LAW 

Oath  to  Schedule  B. 

United  States  of  America,  ] 

District  of ,  J 

On  this day  of ,  A.  D. 

. . . . ,  before  me  personally  came 

the  person  mentioned  in  and  who  subscribed  to  the 
foregoing  schedule,  and  who,  being  by  me  first  duly 
sworn,  did  declare  the  said  schedule  to  be  a  state- 
ment of  all  his  estate,  both  real  and  personal,  in 
accordance  with  the  Acts  of  Congress  relating  to 
bankruptcy. 


(Official  character.) 


APPENDIX  B  ;893 

(Form  No.  2.) 
Partnership  Petition. 

To  the  Honorable , 

Judge  of  the  District  Court  of  the  United  States, 
for  the District  of : 

The  petition  of 

respectfully  represents: 

That  your  petitioners  and 

have  been  partners  under  the  lirm  name  of 

,  having  their  principal 

place  of  business  at ,  in  the  County 

of ,  and  District  and  State  of 

,  for  the  greater  portion  of 

the  six  months  next  immediately  preceding  the  iiling 
of  this  petition;  that  the  said  partners  owe  debts 
which  they  are  unable  to  pay  in  full;  that  your  peti- 
tioners are  willing  to  suiTender  all  their  property 
for  the  benefit  of  their  creditors,  except  such  as  is 
exempt  by  law,  and  desire  to  obtain  the  benefit  of 
the  Acts  of  Congress  relating  to  bankruptcy. 

That  the  schedule  hereto  annexed,  marked  A,  and 

verified  by  oath,  contains  a  full  and 

true  statement  of  all  debts  of  said  partners,  and,  so 
far  as  possible  the  names  and  places  of  residence 
of  their  creditors,  and  such  further  statements  con- 
cerning said  debts  as  are  required  by  the  provisions 
of  said  Acts. 

That  the  schedule  hereto  annexed,  marked  B,  and 
verified  by  oath,  contains  an  ac- 
curate inventory  of  all  the  property,  real  and  per- 
sonal, of  said  partnei*s,  and  such  fui-ther  statements 


294  COMMERCIAL  LAW 

concerning  said  property  as  are  required  bj^  the  pro- 
visions of  said  Acts. 

And  said further  states 

that  the  schedule  hereto  annexed,  marked  C,  verified 
by  his  oath,  contains  a  full  and  true  statement  of  all 
his  individual  debts,  and,  as  far  as  possible,  the 
names  and  places  of  residences  of  his  creditors,  and 
such  further  statements  concerning  said  debts  as  are 
required  by  the  provisions  of  said  Acts;  and  that  the 
schedule  hereto  annexed  marked  D,  verified  by  his 
oath,  contains  an  accurate  inventory  of  all  his  indi- 
vidual property,  real  and  personal,  and  such  further 
statements  concerning  said  property  as  are  required 
by  the  provisions  of  said  Acts. 

And  said further  states 

that  the  schedule  hereto  annexed,  marked  E,  verified 
by  his  oath,  contains  a  full  and  true  statement  of  all 
his  individual  debts,  and,  as  far  as  possible,  the 
names  and  places  of  residences  of  his  creditors,  and 
such  further  statements  concerning  said  debts  as  are 
required  by  the  provisions  of  said  Acts;  and  that  the 
schedule  hereto  annexed  marked  F,  verified  by  his 
oath,  contains  an  accurate  inventory  of  all  his  indi- 
vidual property,  real  and  personal,  and  such  further 
statements  concerning  said  property  as  are  required 
by  the  provisions  of  said  Acts. 

And  said further  states 

that  the  schedule  hereto  annexed,  marked  G,  verified 
by  his  oath,  contains  a  full  and  true  statement  of  all 
his  individual  debts,  and,  as  far  as  possible,  the 
names  and  places  of  residences  of  his  creditors,  and 
such  further  statements  concerning  said  debts  as  are 
required  by  the  provisions  of  said  Acts;  and  that  the 


APPENDIX  B  295 

schedule  hereto  annexed  marked  H,  verified  by  his 
oath,  contains  an  accurate  inventory  of  all  his  indi- 
vidual property,  real  and  personal,  and  such  further 
statements  concerning  said  property  as  are  required 
by  the  provisions  of  said  Acts. 

And  said further  states 

that  the  schedule  hereto  annexed,  marked  J,  verified 
by  his  oath,  contains  a  full  and  true  statement  of  all 
his  individual  debts,  and,  as  far  as  possible,  the 
names  and  places  of  residences  of  his  creditors,  and 
such  further  statements  concerning  said  debts  as  are 
required  by  the  provisions  of  said  Acts;  and  that  the 
schedule  hereto  annexed  marked  K,  verified  by  his 
oath,  contains  an  accurate  inventory  of  all  his  indi- 
vidual property,  real  and  personal,  and  such  further 
statements  concerning  said  property  as  are  required 
by  the  provisions  of  said  Acts. 

Wherefore  your  petitioners  pray  that  the  said 
firm  may  be  adjudged  by  a  decree  of  the  coiu't  to  be 
bankrupts  within  the  purview  of  said  Acts. 

J 

9 

1 

Petitioners. 

,  Attorney. 

,  the  petitioning 

debtors  mentioned  and  described  in  the  foregoing 
petition,  do  hereby  make  solemn  oath  that  the  state- 
ments contained  therein  are  true  according  to  the 
best  of  their  knowledge,  information,  and  belief. 

> 

> 

> 

Petitioners. 


296  COMMERCIAL  LAW 

Subscribed  and  sworn  to  before  me,  this, 
day  of A.  D 


(Official  character.) 
(Schedules  to  be  annexed  corresponding  with 
schedules  under  Form  No.  1.) 


APPENDIX  B  397 

(Form  No.  3.) 
Creditor's  PetitioxL 

To  the  Honorable , 

Judge  of  the  District  Court  of  the  United  States 
for  the District  of : 

The  petition  of ,  of , 

and ,  of ,  and 

of ,  respectfully  shows : 

That ,of , 

has  for  the  greater  portion  of  six  months  next  pre- 
ceding the  date  of  filing  this  petition,  had  his  princi- 
pal place  of  business  (or  resided,  or  had  his  domicile), 

at ,  in  the  County  of 

and  State  and  District  aforesaid,  and  owes  debts  to 
the  amount  of  $1,000. 

That  your  petitioners  are  creditors  of  said 

,  having  provable  claims  amount- 
ing in  the  aggregate  in  excess  of  securities  held  by 
them,  to  the  sum  of  $500.  That  the  nature  and 
amoimt  of  your  petitioners'  claims  ai'e  as  follows: 


And  your  petitioners  further  represent  that  said 

is  insolvent,  and  that  within 

four  months  next  preceding  the  date  of  this  petition 

the  said committed  an  act 

of  bankruptcy,  in  that  he  did  theretofore,  to-wit,  on 
thig day  of 

Wherefore  your  petitioners  pray  that  service  of 
this  petition,  with  a  subpoena,  may  be  made  upon 
as  provided  in  the  Acts  of 


298  COMMERCIAL  LAW 

Congress  relating  to  bankruptcy,  and  that  he  may 
be  adjudged  by  the  court  to  be  a  bankrupt  within 
the  purview  of  said  Acts. 


United  States  of  America, 
District  of , 


Petitioners. 
,  Attorney. 


ss; 


,  being  three  of  the  peti- 
tioners above  named,  do  hereby  solemn  oath  that  the 
statements  contained  in  the  foregoing  petition,  sub- 
scribed by  them  are  true. 

Before  me, ,  this day 

of ,       .... 


(Official  character.) 
(Schedules  to  be  annexed,  corresponding  with 
schedules  under  Form  No.  1.) 


APPENDIX  B  299 

(Form  No.  4.) 

Order  to  Show  Cause  Upon  Creditors*  Petition. 

In  the  District  Court  of  the  United  States  for  the 
District  of 

In  the  matter  of 


In  Bankruptcy. 


Upon  consideration  of  the  petition  of 

that be  declared  a  bankrupt,  it  is 

ordered  that  the  said do  appear 

at  this  court  as  a  court  of  bankrupt,  to  be  holden 

at ,  in  the  District  aforesaid,  on  the 

day  of ,  at  o  'clock 

in  the noon,  and  show  cause,  if  any  there 

be,  why  the  prayer  of  said  petition  should  not  be 
granted;  and 

It  is  further  ordered  that  a  copy  of  said  petition, 
together  with  a  writ  of  subpoena,  be  served  on  said 

,  by  delivering  the  same  to 

him  personally  or  by  leaving  the  same  at  his  usual 
place  of  abode  in  said  District,  at  least  five  days 
before  the  day  aforesaid. 

Witnesss  the  Honorable ,  judge 

of  the  said  court,  and  the  seal  thereof,  at , 

in  said  District,  on  the day  of , 

A.  D 


[  Seal  of  ]  Clerk, 

[the  court.] 


300  COMMERCIAL  LAW 

(Form  No.  5.) 

Subpoena  to  Alleged  Bankrupt. 

United  States  of  America, ' 
District  of 


To ,  in  said  district,  greeting: 

For  certain  causes  offered  before  the  District 
Court  of  the  United  States  of  America  within  and 

for  the District  of ,  as 

a  court  of  bankruptcy,  we  command  and  strictly  en- 
join you,  laying  all  other  matters  aside  and  notwith- 
standing any  excuse,  that  you  personally  appear  be- 
fore our  said  District  Court  to  be  holden  to , 

in  said  District,  on  the day  of 

A.  D.        .  . , to  answer  to  a  petition 

filed  by in  our  said  court, 

praying  that  you  may  be  adjudged  a  bankrupt;  and 
to  do  further  and  receive  that  which  our  said  District 
Coiu*t  shall  consider  in  this  behalf.  And  this  you 
are  in  no  wise  to  omit,  under  the  pains  and  penalties 
of  what  may  befall  thereon. 

Witnesss  the  Honorable ,  judge 

of  said  court,  and  the  seal  thereof,  at , 

this day  of ,  A.  D. 

[  Seal  of  ] 
[the  court.] 

Clerk. 


APPENDIX  B  301 

(Form  No.  6) 

Denial  of  Bankruptcy. 

In  the  District  Court  of  the  United  States  for  the 
District  of 

In  the  matter  of 

In  Bankruptcy. 


At in  said  District,  on  the day 

of ,  A.  D 

And  now  the  said appears, 

and  denies  that  he  has  committed  the  act  of  bank- 
ruptcy set  forth  in  said  petition,  or  that  he  is  in- 
solvent, and  avers  that  he  should  not  be  declared 
bankrupt  for  any  cause  in  said  petition  alleged;  and 
this  he  prays  may  be  required  of  by  the  com-t  (or,  he 
demands  that  the  same  may  be  inquired  of  by  a  jury). 

Subscribed  and  sworn  to  before  me  this 

day  of ,  A.  D.      


(Official  character.) 


303  COMMERCIAL  LAW 

(Form  No.  7.) 

Order  for  Jury  Trial. 

In  the  District  Court  of  the  United  States  for  the 
District  of 


In  the  matter  of 


Jn  Bankruptcy. 


At ,  in  said  district,  on  the 

day  of ,19... 

Upon  the  demand  in  writing  filed  by 

,  alleged  to  be  a  bankrupt,  that  the 

fact  of  the  commission  by  him  of  an  act  of  bankruptcy 
and  the  fact  of  his  insolvency  may  be  inquired  of  by 
a  jury,  it  is  ordered  that  said  issue  be  submitted  to  a 
jury. 

Clerk. 
[Seal  of] 
[  Court.  ] 


APPENDIX  B  303 

(Form  No.  8.) 
Special  Warrant  to  Marshal. 

In  the  District  Court  of  the  United  States  for  the 
District  of 


In  the  matter  of 


In  Bankruptcy. 


To  the  marshal  of  said  district  or  to  either  of  his 

deputies,  greeting: 

Whereas,  a  petition  for  adjudication  of  bank- 
ruptcy was,  on  the day  of , 

A.  D.  19 ... ,  filed  against ,  of 

the  county  of and  State  of 

,  in  said  district,  and  said  petition  is 

still  pending;  and  whereas  it  satisfactorily  appears 

that  said has  committed  an  act  of 

bankruptcy  (or  has  neglected  or  is  neglecting,  or  is 
about  to  so  neglect  his  property  that  it  has  thereby 
deteriorated  or  is  thereby  deteriorating  or  is  about 
thereby  to  deteriorate  in  value)  you  are  therefore 
authorized  and  required  to  seize  and  take  possession 

of  all  the  estate,  real  and  personal,  of  said 

,  and  of  all  his  deeds,  books  of  account, 

and  papers,  and  to  hold  and  keep  the  same  safely 
subject  to  the  further  order  of  the  court. 

Witness  the  Honorable , 

judge  of  said  court,  and  the  seal  thereof,  at 


304  COMMERCIAL  LAW 

,  in  said  district,  on  the day  of 

,A.D.  19... 


Clerk. 
[  Seal  of  ] 
[the  Court.] 

By  virtue  of  the  within  warrant,  I  have  taken 

possession  of  the  estate  of  the  within  named 

,  and  of  all  his  deeds,  books  of  account, 

and  papers  which  have  come  to  my  knowledge. 


Marshal  (or  Deputy  Marshal). 

Fees  and  Expenses. 

1.  Service  of  warrant 

2.  Necessary  travel,  at  the  rate  of  six 

cents  a  mile  each  way 

3.  Actual  expenses  in  custody  of  prop- 

erty and  other  services  as  follows : 
(Here  state  the  particulars.) 


Marshal  (or  Deputy  Marshal). 
District  of ,  A.  D.  19. . . 

Personally  appeared  before  me  the  said 

,  and  made  oath  that  the  above  expenses 

returned  by  him  have  been  actually  incurred  and 
paid  by  him,  and  are  just  and  reaaonable. 


Referee  in  Bankruptcy* 


APPENDIX  B  305 

TForm  No.  9.) 
Bond  of  Petitioning  Creditor. 

Know   all  men   by   these   presents:    That   we, 

,  as  principal,  and , 

as  sureties,  are  held  and  firmly  bound  unto 

,  in  the  full  and  just  sum  of 

Dollars,  to  be  paid  to  the  said , 

executors,  administrators,  or  assigns,  to  which  pay- 
ment, well  and  truly  to  be  made,  we  bind  ourselves, 
our  heirs,  executors,  and  administrators,  jointly  and 
severally,  by  these  presents. 

Signed  and  sealed  this day  of , 

A.D.  19... 

The  condition  of  this  obligation  is  such  that 
whereas  a  petition  in  bankruptcy  has  been  filed  in 
the   district  court  of  the  United  States,   for  the 

district  of against  the 

said ,  and  the  said 

has  applied  to  that  court  for  a  warrant  to  the  marshal 
of  said  district  directing  him  to  seize  and  hold  the 
property  of  said ,  subject  to  the  fur- 
ther orders  of  said  district  court. 

Now,  therefore,  if  such  a  warrant  shall  issue  for 

the  seizure  of  said  property,  and  if  the  said 

shall  indemnify  the  said 

for  such  damages  as  he  shall  sustain  in  the  event 
such  seizure  shall  prove  to  have  been  wrongfully 
obtained,  then  the  above  obligation  to  be  void,  other- 
wise to  remain  in  full  force  and  virtue. 

30 


306  COMMERCIAL  LAW 

Sealed  and  delivered  in  the  presence  of 


[Seal.] 

[Seal.] 

[Seal.] 

Approved  this day  of , 

A.D.  19... 


District  Judge. 


APPENDIX  B  307 

Form  No.  10.) 
Bond  to  Marshal. 

Know   all  men   by  these   presents:    That   we, 

,  as  principal,  and , 

as  sureties,  are  held  and  firmly  bound  unto 

,  marshal  of  the  United  States  for  the 

district  of ,  in  the  full 

and  just  sum  of dollars,  to  be  paid  to 

the  said ,  his  executors,  administra- 
tors, or  assigns,  to  which  payment,  well  and  truly  to 
be  made,  we  bind  ourselves,  our  heirs,  executors, 
and  administrators  jointly  and  severally,  by  these 
presents. 

Signed  and  sealed  this dav  of , 

A.  D.  19. . . 

The  condition  of  this  obligation  is  such  that 
whereas  a  petition  in  bankruptcy  has  been  filed  in 

the  district  court  of  the  United  States  for  the 

district  of against  the  said 

,  and  the  said  court  has  issued  a 

warrant  to  the  marshal  of  the  United  States  for  said 
district,  directing  him  to  seize  and  hold  property  of 

the  said ,  subject  to  the  further  order 

of  the  court,  and  the  said  property  has  been  seized 
by  said  marshal  as  directed,  and  the  said  district 

court  upon  a  petition  of  said has 

ordered  the  said  property  to  be  released  to  him. 

Now,  therefore,  if  the  said  property  shall  be 

released  accordingly  to  the  said 

and  the  said being  adjudged  a  bank- 
rupt, shall  turn  over  said  property  or  pay  the  value 


308  COMMEECIAL  LAW 

thereof  in  money  to  the  trustee,  then  the  above  obli- 
gation to  be  void;  otherwise  to  remain  in  full  force 
and  virtue. 

Sealed  and  delivered  in  the  presence  of 


Approved  this day  of. 

A.  D.  19. . . 


District  Judge. 


[Seal.] 
[Seal.] 
[Seal.] 


APPENDIX  B  309 

Form  No.  IL— Adjudication  that  Debtor  Is  not 
Bankrupt. 

In  the  District  Court  of  the  United  States  for  the 
District  of 


In  the  matter  of 


►  In  Bankruptcy. 


At ,  in  said  District,  on day 

of ,  A.  D.   .  — ,  before  the  Honorable 

,  judge  of  the  District  of 

This  cause  come  on  to  be  heard  at 

in  said  court,  upon  the  petition  of 

that be  adjudged  a  bankrupt  within 

the  true  intent  and  meaning  of  the  Acts  of  Congress 
relating  to  bankruptcy,  and  (here  state  the  proceed- 
ings, whether  there  was  no  opposition,  or,  if  opposed, 
state  what  proceedings  were  had). 

And  thereupon,  and  upon  consideration  of  the 
proofs  in  said  cause  (and  the  argument  of  counsel 
thereon,  if  any),  is  was  found  that  the  facts  set  forth 
in  said  petition  were  not  proved;  and  it  is  therefore 

adjudged,  that  said was  not  a 

bankrupt,  and  that  said  petition  be  dismissed,  with 
costs. 

Witness  the  Honorable ,  judge 

of  said  court,  and  the  seal  thereof,  at ,  in 

said  District,  on  the day  of , 

A.  D 

Clerk. 


310  COMMERCIAL  LAW 

Form  No.  12.— Adjudication  of  Bankruptcy. 

In  the  District  Court  of  the  United  States  for  the 
District  of 


In  the  matter  of 


>  In  Bankruptcy. 


At ,  in  said  District,  on  the day 

of ,  A.  D.      . . . ,  before  the  Honorable 

,  judge  of  said  court  in  bankruptcy, 

the  petition  of that 

be  adjudged  a  bankrupt,  within  the  true  intent  and 
meaning  of  the  Acts  of  Congress  relating  to  bank- 
ruptcy, having  been  heard  and  duly  considered,  the 

said is  hereby  declared  and  adjudged 

bankrupt  accordingly. 

Witness  the  Honorable ,  judge 

of  said  court,  and  the  seal  thereof,  at , 

in  said  District,  on  the day  of , 

A.  D 


Clerk. 
[  Seal  of  ] 
[the  court.] 


APPENDIX  B 


311 


Form  No.  13.— -Appointment,  Oath  and  Report  of 

Appraisers. 

In  the  District  Court  of  the  United  States  for  the 
District  of 


In  the  matter  of 


In  Bankruptcy. 


It  is  ordered  that ,  of , 

of and ,  of 

,  three  disinterested  persons  be, 

and  they  are  hereby  appointed  appraisers  to  appraise 
the  real  and  personal  property  belonging  to  the  estate 
of  the  said  bankrupt  set  out  in  the  schedules  now 
on  file  in  this  court,  and  report  their  appraisal  to 
the  court,  said  appraisal  to  be  made  as  soon  as  may 
be,  and  the  appraisers  to  be  duly  sworn. 

Witness  my  hand  this day  of , 

A.  D 


Referee  in  Bankruptcy. 


312 


COMMEBCIAL  LAW 


District 


of. 


^ss; 


Personally  appeared  the  within  named 

and  severally  made  oath  that  they  will  fully  and 
fairly  appraise  the  aforesaid  real  and  personal  prop- 
erty according  to  their  best  skill  and  judgment. 


We,  the  undersigned,  having  been  notiiied  that 
we  were  appointed  to  estimate  and  appraise  the  real 
and  personal  property  aforesaid,  have  attended  to 
the  duties  assigned  us,  and  after  a  strict  examina- 
tion and  careful  inquiry,  we  do  estimate  and  appraise 
the  same  as  follows: 


Dollars 


Cents 


In  witness  whereof  we  hereunto  set  our  hands,  at 

,  this day  of , 

A.  D 


APPENDIX  B  313 

Form  No.  14.— Order  of  Reference. 

In  the  District  Court  of  the  United  States  for  the 
District  of 


In  the  matter  of 


In  Bankruptcy. 


Whereas,  of , 

in  the  county  of and  District  afore- 
said on  the day  of ,  A.  D.      . . . , 

was  duly  adjudged  a  banki'upt  upon  a  petition  filed 

in  this  court  by  (or  against)  him  on  the day 

of ,  A.  D.       . . . ,  according  to  the 

provisions  of  the  Acts  of  Congress  relating  to 
bankruptcy, 

It  is  therefore  ordered,  that  said  matter  be  re- 
ferred to ,  one  of  the  referees  in 

bankruptcy  of  this  coui't,  to  take  such  further  pro- 
ceedings therein  as  are  required  by  said  Acts;  and 

that  the  said shall  attend  before 

said  referee  on  the day  of ,  at 

,  aud  thenceforth  shall  submit  to 

such  orders  as  may  be  made  by  said  referee  or  by 
this  comrt  relating  to  said  bankruptcy. 

Witness  the  Honorable ,  judge 

of  the  said  court,  and  the  seal  thereof,  at , 

in  said  District,  on  the day  of , 

A.  D 

[  Seal  of  ] 

[the  court.] 


ClLrk. 


314  COMMEECIAL  LAW 

Form  No.  15.---0rder  of  Reference  in  Judge's 
Absence. 

In  the  District  Court  of  the  United  States  for  the 
District  of 


In  the  matter  of 


In  Bankruptcy. 


Whereas  on  the day  of , 

A.  D.      . . . ,  a  petition  was  filed  to  have , 

of ,  in  the  County  of and 

District  aforesaid,  adjudged  a  bankrupt  according  to 
the  provisions  of  the  Acts  of  Congress  relating  to 
bankruptcy,  and  whereas  the  judge  of  said  court 
was  absent  from  said  District  at  the  time  of  filing 
of  said  petition  (or  in  case  of  involuntary  bank- 
ruptcy, on  the  next  day  after  the  last  day  on  which 
pleadings  might  have  been  filed,  and  none  have  been 
filed  by  the  bankrupt  or  any  of  his  creditors)  it  is 
thereupon  ordered  that  the  said  matter  be  referred 
to ,  one  of  the  referees  in  bank- 
ruptcy of  this  court,  to  consider  said  petition  and 
take  proceedings  therein  as  are  required  by  said 

Acts ;  and  that  the  said shall 

attend  before  said  referee  on  the day  of 

,  A.  D.        . . ,  at 

Witness  my  hand  and  seal  of  the  said  court  at 

in  said  District,  on  the day 

of A.  D 


[  Seal  of  ]  Clerk, 

[the  court.] 


APPEXDIX  B  315 

Form  No.  16.— Referee's  Oath  of  Office. 

I, ,  do  solemnly  swear  that 

I  will  administer  justice  without  respect  to  persons, 
and  do  equal  right  to  the  poor  and  to  the  rich,  and 
that  I  will  faithfully  and  impartially  discharge  and 
perform  all  the  duties  incumbent  on  me  as  referee  in 
bankruptcy,  according  to  the  best  of  my  abilities  and 
understanding,  agreeably  to  the  Constitution  and 
Laws  of  the  United  States.    So  help  me  God. 


Subscribed  and  sworn  to  before  me  this 
day  of ,  A.  D 


District  Judge. 


316  COMMERCIAL  LAW 

Form  No.  17.~Bond  of  Referee. 
Know  all  men  by  these  presents : 

That  we of as 

principal,  and of , 

and ,  of ,  as 

sureties  are  held  and  fii'mly  bound  to  the  United 

States  of  America  in  the  sum  of dollars, 

lawful  money  of  the  United  States,  for  the  payment 
of  which,  well  and  truly  to  be  made,  we  bind  our- 
selves, our  heirs,  executors,  and  administrators, 
jointly  and  severally,  by  these  presents. 

Signed  and  sealed  this day  of , 

A.  D. 

The  condition  of  this   obligation  is  such  that 

whereas  the  said .has  been  on 

the day  of ,  A.  D.  189. ., 

appointed  by  the  Honorable ,  judge 

of  the  District  Court  of  the  United  States  for  the 

District  of a  referee  in 

bankruptcy,  in  and  for  the  County  of 

in  said  District,  under  the  Acts  of  Congress  relating 
to  bankruptcy. 

Now  therefore,  if  the  said shall 

well  and  faithfully  discharge  and  perform  all  the 
duties  pertaining  to  the  said  office  of  referee  in  bank- 
ruptcy, then  this  obligation  to  be  void;  otherwise  to 
remain  in  full  force  and  virtue. 

(L.S.) 

(L.  S.) 

(L.8.) 

Approved  this dav  of ., 

A.D.        ...  *. 

District  Judge. 


APPENDIX  B  317 

Form  No.  18.— Notice  of  First  Meeting  of  Creditors. 

In  the  District  Court  of  the  United  States  for  the 

District  of 

In  Bankruptcy. 


In  the  matter  of 


Bankrupt. 


"  In  Bankruptcy. 


To  the  creditors  of ,  of , 

in  the  County  of and  District  afore- 
said, a  bankinipt. 

Notice  is  hereby  given  that  on  the day 

of ,  A.  D.      . . .,  the  said 

was  duly  adjudicated  bankrupt;  and  that  the  first 

meeting  of  his  creditors  will  be  held  at 

in on  the day  of , 

A.  D.       . . .,  at  . . .  .o'clock,  in  the noon,  at 

which  time  the  said  creditors  may  attend,  prove  their 
claims,  appoint  a  trustee,  examine  the  bankrupt,  and 
transact  such  other  business  as  may  properly  come 
before  said  meeting. 


Referee  in  Bankruptcy. 


318 


COMMERCIAL  LAW 


Form  No.  19. — List  of  Debts  at  First  Meeting. 

In  the  District  Court  of  the  United  States  for  the 
District  of 


In  the  matter  of 


Bankrupt. 


'  In  Bankruptcy. 


At ,  in  said  District,  on  the day 

of ,  A.  D.      . . . ,  before , 

referee  in  bankruptcy. 

The  following  is  a  list  of  creditors  who  have  this 
day  proved  their  debts: 


Names  of  C.edltors. 

Residence. 

Debts  Proved. 

t 

c. 

Referee  in  Bankruptcy. 


APPENDIX  B  319 

Form  No.  20. — General  Letter  of  Attomey-In-Pact 
When  Creditor  is  Not  Represented  by  Attorney 

At  Law. 

In  the  District  Court  of  the  United  States  for  the 
District  of 


In  the  matter  of 

Bankrupt. 
To : 


^  In  Bankruptcy. 


I, ,  of ,  in 

the  County  of and  State  of , 

do  hereby  authorize  you,  or  any  one  of  you,  to  attend 
the  meeting  or  meetings  of  creditors  of  the  bankrupt 
aforesaid,  at  a  court  of  bankruptcy,  wherever  adver- 
tised or  directed  to  be  holden,  on  the  day  and  at  the 
hour  appointed  and  notified  by  said  court  in  said 
matter,  or  at  such  other  place  and  time  as  may  be 
appointed  by  the  court  for  holding  such  meeting  or 
meetings,  or  at  which  such  meeting  or  meetings,  or 
any  adjournment  or  adjoiu'nments  thereof  may  be 
held,  and  then  and  there  from  time  to  time,  and  as 
often  as  there  may  be  occasion,  for  me  and  in  my 
name  to  vote  for  or  against  any  proposal  or  resolu- 
tion that  may  be  then  submitted  under  the  Acts  of 


320  COMMERCIAL  LAW 

Congress  relating  to  bankruptcy;  and  in  the  choice 
of  trustee  or  trustees  of  the  estate  of  the  said  bank- 
rupt, and  for  me  to  assent  to  such  appointment  of 
trustee;  and  with  like  powers  to  attend  and  vote  at 
any  other  meeting  or  meetings  of  creditors,  or  sit- 
ting or  sittings  of  the  court  which  may  be  held 
therein  for  any  of  the  piu"poses  aforesaid;  also  to 
accept  any  composition  proposed  by  said  bankrupt 
in  satisfaction  of  his  debts,  and  to  receive  payments 
of  dividends  and  of  money  due  me  under  any  com- 
position, and  for  any  other  purpose  in  my  interest 
whatsoever,  with  full  power  of  substitution. 

In  witness  whereof  I  have  hereunto  signed  my 

name  and  affixed  my  seal  the day  of , 

A.  D. 

Acknowledged  before  me  this day  of , 

A.  D. 


(Official  character.) 


APPENDIX  B  321 

Form  No.  21. — Special  Letter  of  Attorney  in  Fact. 

In  the  District  Court  of  the  United  States  for  the 
District  of 


In  the  matter  of 

Bankrupt. 
To 


'  In  Bankruptcy. 


I  hereby  authorize  you,  or  any  one  of  you,  to  at- 
tend the  meeting  of  creditors  in  this  matter,  adver- 
tised or  directed  to  be  holden  at ,  on 

the day  of ,  before ,  or  any 

adjournment  thereof,  and  then  and  there 

for and  in name 

to  vote  for  or  against  any  proposal  or  resolution  that 
may  be  lawfully  made  or  passed  at  such  meeting  or 
adjourned  meeting,  and  in  the  choice  of  trustee  or 
trustees  of  the  estate  of  the  said  bankrupt. 

(L.S.) 

In  witness  whereof  I  have  hereunto  signed  my 

name  and  affixed  my  seal  the day  of , 

A.  D. 

Signed,  sealed,  and  delivered  in  presence  of 


Acknowledged  before  me  this.  . .  . day  of , 

A.  D.        ...  , 

(Official  character.) 


21 


322 


COMMEECIAL  LAW 


Form  No.  22. — ^Appointment  of  Trustee  by  Creditors. 

In  the  District  Court  of  the  United  States  for  the 
District  of 


In  the  matter  of 
Bankrupt. 


.  In  Bankruptcy. 


At ,  in  said  District,  on  the 

day  of ,  A.  D.       . . . ,  before 

,  referee  in  bankruptcy. 

This  being  the  day  appointed  by  the  court  for  the 
first  meeting  of  creditors  in  the  above  bankruptcy, 
and  of  which  due  notice  has  been  given  in  the  (here 
insert  the  names  of  the  newspapers  in  which  the 
notice  was  published),  we,  whose  names  are  here 
under  written,  being  the  majority  in  number  and  in 
amount  of  claims  of  the  creditors  of  the  said  bank- 
rupt, whose  claims  have  been  allowed,  and  who  are 

present  at  this  meeting,  do  hereby  appoint , 

of ,  in  the  County  of and 

State  of ,  to  be  the  trustee ...  of  the 

said  bankrupt's  estate  and  effects. 


Signatures  of  Creditors. 

Residences  of  the  Same. 

Amount  of  Debts. 

$ 

c. 

Ordered  that  the  above  appointment  of  trustee, 
be,  and  the  same  is  hereby  approved. 


Referee  in  Bankruptcy. 


APPENDIX  B  323 

Form  No.  23.— Appointment  of  Trustee  by  Referee. 

In  the  District  Court  of  the  United  States  for  the 
District  of 


In  the  matter  of 


Bankrupt. 


'  In  Bankruptcy. 


At ,  in  said  District,  on  the day 

of ,  A.  D.      . . . ,  before , 

referee  in  bankruptcy. 

This  being  the  day  appointed  by  the  court  for  the 
first  meeting  of  creditors  under  the  said  bankruptcy, 
and  of  which  due  notice  has  been  given  in  the  (here 
insert  the  names  of  the  newspapers  in  which  notice 
was  published),  I,  the  undersigned  referee  of  the 
said  court  in  bankruptcy,  sat  at  the  time  and  place 
above  mentioned,  pursuant  to  such  notice,  to  take 
the  proof  of  debts  and  for  the  choice  of  trustee  imder 
the  said  bankruptcy;  and  I  do  hereby  certify  that  the 
creditors  whose  claims  had  been  allowed  and  were 
present,  or  duly  represented,  failed  to  make  choice 
of  a  trustee  of  said  bankrupt's  estate,  and  therefore 

I  do  hereby  appoint ,  of , 

in  the  County  of and  State  of , 

as  trustee  of  the  same. 


Referee  in  Bankruptcy. 


324  COMMERCIAL  LAW 

Form  No.  24. — Notice  to  Trustee  of  His 
Appointment. 

In  the  District  Court  of  the  United  States  for  the 
District  of 

In  the  matter  of  ^ 
Jn  Bankruptcy. 

Bankrupt. 

To ,  of ,  in  the  coimty  of 

,  and  district  aforesaid: 

I  hereby  notify  you  that  you  were  duly  appointed 
trustee  (or  one  of  the  trustees)  of  the  estate  of  the 
above-named  bankrupt  at  the  first  meeting  of  the 

creditors,  on  the day  of ,  A.  D. 

. . . ,  and  I  have  approved  said  appointment.  The 
penal  sum  of  your  bond  as  such  trustee  has  been 

fixed  at dollars.     You  are  required  to 

notify  me  forthwith  of  your  acceptance  or  rejection 
of  the  trust. 

Dated  at the day  of 

A.  D.      ... 


Referee  in  Bankruptcy. 


APPENDIX  B  3S5 


Form  No.  25.— Bond  of  Trustee. 

Know   all  men   by   these   presents:    That   we, 

,  of ,  as  principal, 

and ,  of ,  and 

,  of ,  as  sureties, 

are  held  and  firmly  boimd  unto  the  United  States  of 

America  in  the  smn  of dollars,  in  lawful 

money  of  the  United  States,  to  be  paid  to  the  said 
United  States,  for  which  payment,  well  and  truly  to 
be  made,  we  bind  ourselves  and  our  heirs,  executors, 
and  administratoi*s,  jointly  and  severally,  by  these 
presents. 

Signed  and  sealed  this day  of , 

A.  D.        ... 

The  condition  of  this  obligation  is  such,  that 

whereas  the  above-named w^as,  on  the 

day  of ,  A.  D.        . . . ,  appointed 

trustee  in  the  case  pending  in  bankruptcy  in  said 

court,  wherein is  the  bankrupt,  and  he, 

the  said ,  has  accepted  said  trust  with 

all  the  duties  and  obligations  pertaining  thereunto: 

Now,  therefore,  if  the  said ,  trustee, 

as  aforesaid,  shall  obey  such  orders  as  said  com't 
may  make  in  relation  to  said  trust,  and  shall  faith- 
fully and  truly  account  for  all  the  moneys,  assets, 
and  effects  of  the  estate  of  said  bankrupt  which 
shall  come  into  his  hands  and  possession,  and  shall 
in  all  respects  faithfully  perform  all  his  official  du- 
ties as  said  trustee,  then  this  obligation  to  be  void; 
otherwise,  to  remain  in  full  force  and  virtue. 


326  COMMERCIAL  LAW 

Signed  and  sealed  in 
presence  of 


(Seal.) 
(Seal.) 
(Seal.) 


APPENDIX  B  337 


Form  No.  26. — Order  Approving  Trustee's  Bond. 

In  the  District  Court  of  the  United  States  for  the 
District  of 


In  the  matter  of 


Bankrupt.   , 


•In  Bankruptcy. 


It  appearing  to  the  Court  that , 

of ,  and  in  said  district,  has  been 

duly  appointed  trustee  of  the  estate  of  the  above- 
named  bankrupt,  and  has  given  a  bend  with  sureties 
for  the  faithful  performance  of  his  official  duties, 
in  the  amount  fixed  by  the  creditors  (or  by  order  of 

the  court),  to  wit,  in  the  sum  of dollars, 

it  is  ordered  that  the  said  bond  be,  and  the  same  is 
hereby,  approved. 


Referee  in  Bankruptcy. 


328  COMMERCIAL  LAW 

Form  No.  27.— Order  That  No  Trustee  Be  Appointed. 

In  the  District  Court  of  the  United  States  for  the 
District  of  


In  the  matter  of 


Bankrupt. 


In  Bankruptcy. 


It  appearing  that  the  schedule  of  the  bankrupt 
discloses  no  assets,  and  that  no  creditor  has  appeared 
at  the  first  meeting,  and  that  the  appointment  of  a 
trustee  of  the  bankrupt's  estate  is  not  now  desirable, 
it  is  ordered  that,  until  further  order  of  the  court, 
no  trustee  be  appointed  and  no  other  meeting  of  the 
creditors  be  called. 


Referee  in  Bankruptcy. 


APPENDIX  B  339 


Porm  No.  28.-~Order  for  Examination  of  Bankrupt. 

In  the  District  Court  of  the  United  States  for  the 
District  of 


In  the  matter  of  i 


Bankrupt.  . 


In  Bankruptcy. 


At ,  on  the day  of , 

A.  D.      . . 

Upon  the  application  of ,  trus- 
tee of  said  bankrupt  (or  creditor  of  said  bankrupt), 

it  is  ordered  that  said  bankrupt  attend  before 

,  one  of  the  referees  in  bankruptcy 

of  this  court,  at on  the day  of 

,  at o'clock  in  the 

noon,  to  submit  to  examination  under  the  acts  of 
Congress  relating  to  bankruptcy,  and  that  a  copy  of 
this  order  be  delivered  to  him,  the  said  bankrupt, 
forthwith. 


Referee  in  Bankruptcy. 


3J0  COMMEBCIAL  LAW 


Form  No.  29.— Examination  of  Bankrupt  or  Witness. 

In  the  District  Court  of  the  United  States  for  the 
District  of  


In  the  matter  of  1 


Bankrupt.  , 


In  Bankruptcy. 


At ,  in  said  district,  on  the 

day  of ,  A.  D.      . . . ,  before , 

one  of  the  referees  in  bankruptcy  of  said  court. 

,  of ,  in  the 

county  of ,  and  State  of , 

being  duly  sworn  and  examined  at  the  time  and  place 
above  mentioned,  upon  his  oath  says.  (Here  insert 
substance  of  examination  of  party.) 


Referee  in  Bankruptcy. 


APPENDIX  B  331 

Form  No.  30.— Summons  to  Witness. 


To 


Whereas ,  of , 

in  the  county  of ,  and  State  of 

,  has  been  duly  adjudged  bankrupt, 

and  the  proceeding  in  bankruptcy  is  pending^  in  the 

District  Court  of  the  United  States  f or  the . . .' 

District  of , 

These  are  to  require  you,  to  whom  this  summons 

is  directed,  personally  to  appear  before , 

one  of  the  referees  in  bankruptcy  of  the  said  court, 

at ,  on  the day  of , 

at o'clock  in  the noon,  then  and 

there  to  be  examined  in  relation  to  said  bankruptcy. 

Witness  the  Honorable 

Judge  of  said  court,  and  the  seal  thereof  at , 

this dav  of ,  A.  D. 


Clerk. 

Return  of  Summons  to  Witness. 

In  the  District  Court  of  the  United  States  for  the 
District  of 

In  the  matter  of 

Jn  Bankruptcy. 


Bankrupt. 

On  this day  of ,  A.  D. 

. . ,  before  me  came ,  of 


332  COMMEECIAL  LAW 

,  in  the  county  of , 

and  State  of ,  and  makes  oath,  and 

says  that  he  did,  on ,  the day  of 

,  A.  D.         . . ,  personally  served 

,  of ,  in 

the  county  of and  State  of 

,  with  a  true  copy  of  the  summons  hereto 

annexed,  by  delivering  the  same  to  him ;  and  he  fur- 
ther makes  oath,  and  says  that  he  is  not  interested 
in  the  proceeding  in  bankruptcy  named  in  said 
summons. 

Subscribed  and  sworn  to  before  me  this 

day  of ,  A.  D.      ... 


APPENDIX  B  333 

Form  No.  31.— Proof  of  Unsecured  Debt. 

In  the  District  Court  of  the  United  States  for  the 
District  of 

In  the  matter  of  -» 

>In  Bankruptcy. 

Bankrupt. 

At ,  in  said  district  of 

,  on  the day  of , 

A.  D.         . . . ,  came ,  of 

,  in  the  count}'  of , 

in  said  district  of ,  and  made  oath, 

and  says  that ,  the  person 

by  (or  against)  whom  a  petition  for  adjudication  of 
bankruptcy  has  been  filed,  was  at  and  before  the 
filing  of  said  petition,  and  still  is,  justly  and  truly 

indebted  to  said  deponent  in  the  sum  of 

dollars;  that  the  consideration  of  said  debt  is  as 
follows : 

that  no  part  of  said  debt  has  been  paid  (except .... 

) 

that  there  are  no  set-offs  or  counterclaims  to  the 
same  (except :.^. 

- ) 

and  that  deponent  has  not,  nor  has  any  person  by 
his  order,  or  to  his  knowledge  or  belief,  for  his  use. 


334  COMMERCIAL  LAW 

had  or  received  any  manner  of  security  for  said  debt 
whatever. 


Creditor. 

Subscribed  and  sworn  to  before  me  this 

day  of ,  A.  D.      ... 

> 

(Ofl&cial  character.) 


APPENDIX  B  335 

Form  No.  32.— Proof  of  Secured  Debt. 

In  the  District  Court  of  the  United  States  for  the 
District  of 

In  the  matter  of 

^In  Bankruptcy. 

Bankrupt. 

At ,  in  said  district  of ...... .. 

,  on  the day  of , 

A.  D.         . . . ,  came ,  of 

,  in  the  county  of , 

in  said  district  of ,  and  made  oath, 

and  says  that ,  the  person 

by  (or  against)  whom  a  petition  for  adjudication  of 
bankruptcy  has  been  filed,  was  as  and  before  the 
filing  of  said  petition,  and  still  is,  justly  and  truly 

indebted  to  said  deponent,  in  the  sum  of 

dollars,  and  the  consideration  of  said  debt  is  as  fol- 
lows :  

;  that  no  part  of  said  debt  has 

been  paid  (except ) ; 

that  there  are  no  set-offs  or  counterclaims  to  the 

same  (except ) ;  and 

that  the  only  securities  held  by  this  deponent  for 
said  debt  are  the  following: 


Creditor. 

Subscribed  and  sworn  to  before  me  this 

day  of ,  A.  D.  ... 


(Official  character.) 


336  COMMERCIAL  LAW 

Form  No.  33. — Proof  of  Debt  Due  Corporation. 

In  the  District  Court  of  the  United  States  for  the 
District  of 

In  the  matter  of 
Lin  Bankruptcy. 

Bankrupt. 

At ,  in  said  district  of 

,  on  the day  of , 

A.  D.         . . . ,  came ,of 

,  in  the  county  of , 

and  State  of ,  and  made  oath  and 

says  that  he  is of  the , 

a  corporation  incorporated  by  and  under  the  laws  of 
the  State  of ,  and  carrying  on  busi- 
ness at ,  in  the  county  of 

,  and  State  of ,  and  that  he 

is  duly  authorized  to  make  this  proof,  and  says  that 

the  said ,  the  person  by  (or  against) 

whom  a  petition  for  adjudication  of  bankruptcy  has 
been  filed,  was  at  and  before  the  filing  of  the  said 
petition,  and  still  is  justly  and  truly  indebted  to 

said  corporation  in  the  sum  of 

dollars;  that  the  consideration  of  said  debt  is  as  fol- 
lows:   

;  that  no  part  of  said  debt 

has  been  paid  (except 

); 


APPENDIX  B  337 

that  there  are  no  set-offs  or  counterclaims  to  the 
same  (except 

); 

and  that  said  corporation  has  not,  nor  has  any  per- 
son by  its  order,  or  to  the  knowledge  or  belief  of  said 
deponent,  for  its  use,  had  or  received  any  manner  of 
security  for  said  debt  whatever. 


of  said  Corporation. 

Subscribed  and  sworn  to  before  me  this , 

day  of ,  A.  D. 


(Official  character.) 


12 


338  COMMERCIAL  LAW 


Form  No.  34.— Proof  of  Debt  by  Partner. 

In  the  District  Court  of  the  United  States  for  the 
District  of 


In  the  matter  of 


Bankrupt. 


In  Bankruptcy. 


At ,  in  said  district  of 

,  on  the day  of , 

A.  D.         . . ,  came ,  of 

,  in  the  coimty  of , 

in  said  district  of ,and  made  oath 

and  says  that  he  is  one  of  the  firm  of , 

in  said  district  of ,  consisting  of 

himself  and ,  of 

,  in  the  county  of and 

State  of ;  that  the  said 

,  the  person  by  (or  against)  whom 

a  petition  for  adjudication  of  bankruptcy  has  been 
filed,  was  at  and  before  the  filing  of  said  petition, 
and  still  is,  justly  and  truly  indebted  to  this  de- 
ponent's said  fiirm  in  the  sum  of 

dollars;  that  the  consideration  of  said  debt  is  as  fol- 
lows ;  

> 

that  no  part  of  said  debt  has  been  paid  (except 

); 

that  there  are  no  set-offs  or  counterclaims  to  the 


APPENDIX  B                                   339 
same  (except 

); 

and  this  deponent  has  not,  nor  has  his  said  firm,  nor 
has  any  pei'son  by  their  order,  or  to  this  deponent's 
knowledge  or  belief,  for  their  use,  had  or  received 
any  manner  of  security  for  said  debt  whatever. 


Creditor. 

Subscribed  and  sworn  to  before  me  this 

day  of ,  A.  D. 

f 

(Official  character.) 


340  COMMERCIAL  LAW 

Form  No.  35.— Proof  of  Debt  by  Agent  or  Attorney. 

In  the  District  Court  of  the  United  States  for  the 
District  of 

In  the  matter  of  ^ 

In  Bankruptcy. 

Bankrupt. 

At ,  in  said  district  of 

,  on  the day  of , 

A.  D.        ^ .,  came ,  of , 

in  the  county  of and  State  of 

,  attorney  (or  authorized  agent)  of 

,  in  the  county  of , 

and  State  of ,  and  made  oath  and 

says  that ,  the  person  by 

(or  against)  whom  a  petition  for  adjudication  of 
bankruptcy  has  been  filed,  was  at  and  before  the 
filing  of  said  petition,  and  still  is,  justly  and  truly 

indebted  to  the  said ,  in 

the  sum  of dollars;  that  the  con- 
sideration of  said  debt  is  as  follows :    


that  no  part  of  said  debt  has  been  paid  (except 

); 

and  that  this  deponent  has  not,  nor  has  any  person 
by  his  order,  or  to  this  deponent's  knowledge  or  be- 
lief, for  his  use  had  or  received  any  manner  of 
security  for  said  debt  whatever.    And  this  deponent 


APPENDIX  B  341 

further  says  that  this  deposition  can  not  be  made 
by  the  claimant  in  pei^on  because 


and  that  he  is  duly  authorized  by  his  principal  to 
make  this  affidavit,  and  that  it  is  within  his  knowl- 
edge that  the  aforesaid  debt  was  incurred  as  and  for 
the  consideration  above  stated,  and  that  such  debt, 
to  the  best  of  his  knowledge  and  belief,  still  remains 
unpaid  and  unsatisfied. 

Subscribed  and  sworn  to  before  me  this. 

day  of ,  A.  D. 

y 

(Official  character.) 


342  COMMERCIAL  LAW 


Fonn  Ko.  36.— Proof  of  Secured  Debt  by  Agent. 

In  the  District  Court  of  the  United  States  for  the 
District  of 


In  the  matter  of 


•In  Bankruptcy. 


Bankrupt.  . 

At ,  in  said  district  of 

,  on  the day  of , 

A.  D.        . . ,  came ,  of , 

in  the  county  of and  State  of 

,  attorney  (or  authorized  agent)  of 

,  in  the  county  of , 

and  State  of ,  and  made  oath  and 

says  that ,  the  person  by 

(or  against)  whom  a  petition  for  adjudication  of 
bankruptcy  has  been  filed,  was  at  and  before  the 
filing  of  said  petition,  and  still  is,  justly  and  truly 

indebted  to  the  said ,  in 

the  sum  of dollai's;  that  the  con- 
sideration of  said  debt  is  as  follows:    


that  no  part  of  said  debt  has  been  paid  (except 

); 

and  that  there  are  no  set-offs  or  counterclaims  to  the 
same  (except • 

/;//;;//;;///;/.■  ".v.v.y////.*  v..  v.i'.'.v.v.v.v.'.); 


APPENDIX  B  343 


that  the  only  securities  held  by  said 
for  said  debt  are  the  following:    . . 


and  this  deponent  further  says  that  this  deposition 
can  not  be  made  by  the  claimant  in  person  because 


and  that  he  is  fully  authorized  by  his  principal  to 
make  this  deposition,  and  that  it  is  within  his  knowl- 
edge that  the  aforesaid  debt  was  incurred  as  and  for 
the  consideration  above  stated. 


Subscribed  and  sworn  to  before  me  this . 
day  of ,  A.  D. 


(Official  character.) 


344  COMMERCIAL  LAW 


Form  No.  37.— Affidavit  of  Lost  Bill,  or  Note. 

In  the  District  Court  of  the  United  States  for  the 
District  of 


In  the  matter  of  1 


Bankrupt.  . 


In  Bankruptcy. 


On  this  day  of ,  A.  D. 

. .,  at came ,  of 

,  in  the  county  of ,  and 

State  of ,  and  makes  oath  and  says 

that  the  bill  of  exchange  (or  note),  the  particulars 
whereof  are  underwritten,  has  been  lost  under  the 
following  circumstances,  to-wit:     


and  that  he,  his  deponent,  has  not  been  able  to  find 
the  same ;  and  this  deponent  fin^ther  says  that  he  has 

not,  nor  has  the  said ,  or  any  person 

or  persons  to  their  use,  to  this  deponent's  knowledge 
or  belief,  negotiated  the  said  bill  (or  note),  nor  in 
any  manner  parted  with  or  assigned  the  legal  or 
beneficial  interest  therein,  or  any  part  thereof;  and 
that  he,  this  deponent,  is  the  person  now  legally  and 
beneficially  interested  in  the  same. 


iLPPENDIX  B  345 

Bill  or  Note  above  referred  to. 


Date. 


Drawer  Or  Maker. 


Acceptor. 


Sum. 


Subscribed  and  sworn  to  before  me  this, 
day  of ,  A.  D. 


(Official  character.) 


346  OOMHEBCIAL  LAW 

Fonn  No.  38.— Order  Reducing  Claim. 

In  the  District  Court  of  the  United  States  for  the 
District  of 

In  the  matter  of  > 
[in  Bankruptcy. 

Bankrupt. 

At y  in  said  district,  on  the 

day  of ,  A.  D. 

Upon  the  evidence  submitted  to  this  court  upon 

the  claim  of against  said  estate 

(and,  if  the  fact  be  so,  upon  hearing  coimsel  thereon) 
it  is  ordered,  that  the  amoimt  of  said  claim  be  re- 
duced from  the  sum  of ,  as  set  forth 

in  the  affidavit  in  proof  of  claim  filed  by  said  creditor 

in  said  case,  to  the  sum  of ,  and  that 

the  latter-named  sum  be  entered  upon  the  books  of 
the  trustee  as  the  true  sum  upon  which  a  dividend 
shall  be  computed  (if  with  interest,  with  interest 

thereon  from  the day  of , 

A.D.      ..). 


Beferee  in  Bankruptcy. 


APPENDIX  B  347 

Form  No.  39.— Order  Expunging  Claim. 

In  the  District  Court  of  the  United  States  for  the 
District  of 


In  the  matter  of 


Bankrupt.  , 


In  Bankruptcy. 


At ,  in  said  district,  on  the 

day  of ,  A.  D. 

Upon  the  evidence  submitted  to  the  com^  upon 

the  claim  of against  said  estate 

(and,  if  the  fact  be  so,  upon  hearing  the  counsel 
thereon)  it  is  ordered,  that  said  claim  be  disallowed 
and  expunged  from  the  list  of  claims  upon  the  trus- 
tee's record  in  said  case. 

> 

Referee  in  Bankruptcy. 


348 


COMMEKCIAL  LAW 


Form  No.  40. — List  of  Claims  and  Dividend  to  be 

Recorded  by  Referee  and  by  Him  Delivered 

To  Trustee. 


In  the  District  Court  of  the  United  States  for  the 
District  of 


In  the  matter  of 


Bankrupt.  . 


In  Bankruptcy. 


At ,  in  said  district,  on  the 

day  of ,  A.  D.      .. 

A  list  of  debts  proved  and  claimed  under  the 

bankruptcy  of with 

dividend  at  the  rate  of per  cent  this  day  de- 
clared thereon  by ,  a  referee  in 

bankruptcy. 


No. 


Creditors. 

(To  be  placed  alphabetically,  and 

the  names  of  all  the  parties  to  the 

proof  to  be  carefully  set  forth). 


Sum  Proved. 


Dollars  Cents 


Dividend, 


Dollars 


Cents 


Referee  in  Bankruptcy. 


APPENDIX  B  349 


Form  No.  41.-— Notice  of  Dividend. 

In  the  District  Court  of  the  United  States  for  the 
District  of 


In  Bankruptcy. 


In  the  matter  of  1 

Bankrupt. 
At ,  on  the day  of , 

To 

Creditor  of ,  bankrupt: 

I  hereby  inform  you  that  you  may,  on  application 

at  my  office, ,  on  the day  of 

,  or  on  any  day  thereafter,  between 

the  hours  of ,  receive  a  warrant  for 

the dividend  due  to  you  out  of  the 

above  estate.  If  you  can  not  personally  attend,  the 
warrant  will  be  delivered  to  your  order  on  your  fill- 
ing up  and  signing  the  subjoined  letter. 


Trustee. 
Creditor's  Letter  to  Trustee. 

To 

Trustee  in  bankruptcy  of  the  estate  of 

,  bankrupt: 

Please   deliver  to the 

warrant  for  dividend  payable  out  of  the  said  estate 
to  me. 

» 

Creditor. 


350  COMMEBCIAL  LAW 

Form  No.  42.— Petition  and  Order  for  Sale  by 
Auction  of  Real  Estate. 

In  the  District  Court  of  the  United  States  for  the 
District  of ._.... 

In  the  matter  of  ^ 
In  Bankruptcy. 

Bankrupt. 

Respectfully  represents , 

trustee  of  the  estate  of  said  bankrupt,  that  it  would 
be  for  the  benefit  of  said  estate  that  a  certain  por- 
tion of  the  real  estate  of  said  bankrupt,  to  wit:  (here 
describe  it  and  its  estimated  value)  should  be  sold  by 
auction,  in  lots  or  parcels,  and  upon  terms  and  con- 
ditions as  follows :  

Wherefore  he  prays  that  he  may  be  authorized  to 

make  sale  by  auction  of  said  real  estate  as  aforesaid: 

Dated  this day  of ,  A.  D. 


9 

Trustee. 

The  foregoing  petition  having  been  duly  filed, 
and  having  come  on  for  hearing  before  me,  of  which 
hearing  ten  days'  notice  was  given  by  mail  to  credi- 
tors of  said  bankrupt,  now,  after  due  hearing,  no  ad- 
verse interest  being  represented  thereat  (or  thereto) 
it  is  ordered  that  the  said  trustee  be  authorized  to 


APPENDIX  B  Ml 

sell  the  portion  of  the  bankrupt's  real  estate  speci- 
fied in  the  foregoing  petition,  by  auction,  keeping  an 
accurate  account  of  each  lot  or  parcel  sold  and  the 
price  received  therefor  and  to  whom  sold;  which  said 
account  he  shall  file  at  once  with  the  referee. 

Witness  my  hand  this day  of , 

» 

Beferee  in  Bankruptcy. 


3S3  OOMMEKCIAIi  LAW 

Form  No.  43. — ^Petition  and  Order  for  Redemption  of 
Property  from  Lien. 

In  the  District  Court  of  the  United  States  for  the 
District  of 


In  the  matter  of 


Bankrupt. 


In  Bankruptcy. 


Respectfully  represents , 

trustee  of  the  estate  of  said  bankrupt,  that  a  certain 
portion  of  said  bankrupt's  estate,  to-wit:  (here  de- 
scribe the  estate  or  property  and  its  estimated  value) 
is  subject  to  a  mortgage  (describe  the  mortgage),  or 
to  a  conditional  contract  (describing  it),  or  to  a  lien 
(describe  the  origin  and  nature  of  the  lien)  (or,  if  the 
property  be  personal  property,  has  been  pledged  or 
deposited  and  is  subject  to  a  lien)  for  (describe  the 
nature  of  the  lien)  and  that  it  would  be  for  the  benefit 
of  the  estate  that  said  property  should  be  redeemed 
and  discharged  from  the  lien  thereon.  Wherefore 
he  prays  that  he  may  be  empowered  to  pay  out  of 
the  assets  of  said  estate  in  his  hands  the  sum  of 

,  being  the  amount  of  said  Uen,  in 

order  to  redeem  said  property  therefrom. 


Trustee. 


The  foregoing  petition  having  been  duly  filed  and 
having  come  on  for  a  hearing  before  me,  of  which 


APPENDIX  B  853 

hearing  ten  days'  notice  was  given  by  maU  to  credi- 
tors of  said  bankrupt,  now,  after  due  hearing,  being 

represented  thereat  (or  after  hearing 

in  favor  of  said  petition  and in  op- 
position thereto)  it  is  ordered  that  the  said  trustee 
be  authorized  to  pay  out  of  the  assets  of  the  bank- 
rupt's estate  specified  in  the  foregoing  petition  the 

sum  of ,  being  the  amount  of  the 

lien  in  order  to  redeem  the  property  therefrom. 

Witness  my  hand  this day  of , 

A.  D. 


Referee  in  Bankruptcy. 


as 


354  COMMERCIAL  LAW 

Form  No.  44. — Petition  and  Order  for  Sale  Subject 

to  Lien. 

In  the  District  Court  of  the  United  States  for  the 
District  of 

In  the  matter  of  - 

lln  Bankruptcy. 

Bankrupt. 

Respectfully  represents , 

trustee  of  the  estate  of  said  bankrupt,  that  a  certain 
portion  of  said  bankinipt's  estate,  to  wit:  (here  de- 
scribe the  estate  or  property  and  its  estimated  value) 
is  subject  to  a  mortgage  (describe  mortgage)  or  to  a 
conditional  contract  (describe  it),  or  to  a  lien  (de- 
scribe the  origin  and  nature  of  the  lien)  or  (if  the 
property  be  personal  property)  has  been  pledged  or 
deposited  and  is  subject  to  a  lien  for  (describe  the 
nature  of  the  lien)  and  that  it  would  be  for  the  benefit 
of  the  said  estate  that  said  property  should  be  sold, 
subject  to  said  mortgage,  lien,  or  other  incumbrance. 
Wherefore  he  prays  that  he  may  be  authorized  to 
make  sale  of  said  property,  subject  to  the  incum- 
brance thereon. 


. . . . , 

Trustee. 


Trustee. 

The  foregoing  petition  having  been  duly  filed  and 
ha\dng  come  on  for  a  hearing  before  me,  of  which 


APPENDIX  B  355 

hearing  ten  days'  notice  was  given  by  mail  to  credi- 
tors of  said  bankrupt,  now,  after  due  hearing,  being 

represented  thereat  (or  after  hearing 

in  favor  of  said  petition  and 

in  opposition  thereto)  it  is  ordered  that 

the  said  trustee  be  authorized  to  sell  the  portion  of 
the  bankrupt's  estate  specified  in  the  foregoing  peti- 
tion, by  auction  (or  at  private  sale),  keeping  an 
accurate  account  of  the  property  sold  and  the  price 
received  therefor  and  to  whom  sold;  which  said  ac- 
count he  shall  file  at  once  with  the  referee. 

Witness  my  hand  this day  of , 

A.D. 


*  • 


Referee  in  Bankruptcy. 


356  COMMERCIAL  LAW 

Form  No.  45. — Petition  and  Order  for  Private  Sale. 

In  the  District  Court  of  the  United  States  for  the 
District  of 


In  the  matter  of 


Bankrupt.  < 


In  Bankruptcy. 


Respectfully  represents , 

trustee  of  the  estate  of  said  bankrupt,  that  for  the 
following  reasons,  to  wit:     


it  is  desirable  and  for  the  best  interest  of  the  estate 
to  sell  at  private  sale  a  certain  portion  of  the  said 
estate,  to  wit:     


Wherefore  he  prays  that  he  may  be  authorized  to 
sell  the  said  property  at  private  sale. 

Dated  this day  of ,  A.  D. 


Trustee. 

The  foregoing  petition  having  been  duly  filed  and 
having  come  on  for  a  hearing  before  me,  of  which 
hearing  ten  days'  notice  was  given  by  mail  to  credi- 
tors of  said  bankrupt,  now,  after  due  hearing,  being 

represented  thereat  (or  after  hearing 

in  favor  of  said  petition  and 


APPENDIX  B  857 

in  opposition  thereto)  it  is  ordered 

that  the  said  trustee  be  authorized  to  sell  the  portion 
of  the  bankrupt's  estate  specified  in  the  foregoing 
petition,  at  private  sale,  keeping  an  accurate  account 
of  each  article  sold  and  the  price  received  therefor 
and  to  whom  sold,  which  said  account  he  shall  file  at 
the  oflSce  with  the  referee. 

Witness  my  hand  this dav  of . 

A.  D.        . . 

t 

Referee  in  Bankruptcy. 


358  COMMEECIAL  LAW 

Form  No.  46.— Petition  and  Order  for  Sale  of 
Perishable  Property. 

In  the  District  Court  of  the  United  States  for  the 
District  of 


In  the  matter  of 


Bankrupt.  . 


In  Bankruptcy. 


Respectfully  represents 

the  said  bankrupt  (or  a  creditor  or  the  receiver,  or 
the  trustee  of  the  said  bankrupt's  estate). 

That  a  part  of  the  estate,  to  wit:     

now  in ,  is  perishable,  and  that  there 

will  be  a  loss  if  the  same  is  not  sold  immediately. 

Wherefore  he  prays  the  court  to  order  that  the 
same  be  sold  immediately  as  aforesaid. 

Dated  this day  of ,  A.  D. 


The  foregoing  petition  having  been  duly  filed  and 
having  come  on  for  a  hearing  before  me,  of  which 
hearing  ten  days'  notice  was  given  by  mail  to  the 
creditors  of  the  said  bankrupt  (or  without  notice  to 
the  creditors),  now,  after  due  hearing,  no  adverse 
interest  being  represented  thereat  (or  after  hearing 

in  favor  of  said  petition 

and in  opposition  thereto), 


APPENDIX  B  359 

I  find  that  the  facts  are  as  above  stated,  and  that  the 
same  is  required  in  the  interest  of  the  estate,  and  it 
is  therefore  ordered  that  the  same  be  sold  forthwith 
and  the  proceeds  thereof  deposited  in  court. 

Witness  my  hand  this day  of , 

A.  D.        .. 


Referee  in  Bankruptcy. 


S60 


GOMM£BCIAL  LAW 


Form  No.  47. — Trustee's  Report  of  Exempted 
Property. 

In  the  District  Court  of  the  United  States  for  the 
District  of 


In  the  matter  of 


Jn  Bankruptcy. 


Bankrupt. 
At ,  on  the 


day  of. 


The  following  is  a  schedule  of  property  designated 
and  set  apart  to  be  retained  by  the  bankrupt  afore- 
said, as  his  own  property,  under  the  provisions  of  the 
acts  of  Congress  relating  to  bankruptcy: 


General  Head 

Particular  Description. 

Value. 

Military   aniforms.  arms    and 
eauipments 

Property    exemptedl   by  State 

$ 

ctt. 

Trustee. 


A?F£KIIIX  B  381 

Form  No.  48.-~ Trustee's  Return  of  No  Assets. 

In  the  District  Court  of  the  United  States  for  the 
District  of 


In  the  matter  of 


Bankrupt.  , 


In  Bankruptcj. 


ki ,  in  said  district,  on  the 

day  of ,  A.  D. 

On  the  day  aforesaid  before  me  comes 

,  of ,  in  the  coimty  of 

and  State  of ,  and 

makes  oath,  and  says  that  he,  as  trustee  of  the  estate 
and  effects  of  the  above-named  bankrupt,  neither 
received  nor  paid  any  moneys  on  acount  of  the  estate. 

Subscribed  and  sworn  to  before  me  at , 

this day  of ,  A.  D. 


Bef eree  in  Bankruptey. 


362 


COMMERCIAL  LAW    . 


Form  No.  49. — ^Account  of  Trustee. 

Dr.    The  estate  of ,  in  account 

with ,  Trustee.     Cr. 


f     Cts.      {     Cts. 


$     Cts,      {     Cts. 


APPENDIX  B  363 

Form  No.  50. — Oath  to  Final  Account  of  Trustee. 

In  the  District  Court  of  the  United  States  for  the 
District  of 

In  the  matter  of 

lln  Bankruptcy. 

Bankrupt. 
On  this day  of ,  A.  D. 

.  .  . ,  before  me  comes , 

of ,  in  the  county  of , 

and  State  of ,  and  makes  oath,  and 

says  that  he  was,  on  the day  of , 

A,  D ,  appointed  trustee  of  the  estate  and  ef- 
fects of  the  above-named  bankrupt,  and  that  as  such 
trustee  he  has  conducted  the  settlement  of  the  said 
estate.     That  the  account  hereto  annexed  containing 

sheets  of  paper,  the  first  sheet  whereof  is 

marked  with  the  letter (reference  may  here 

also  be  made  to  any  prior  account  filed  by  said  trus- 
tee) is  true,  and  such  account  contains  entries  of 
every  smn  of  money  received  by  said  trustee  on  ac- 
count of  the  estate  and  effects  of  the  above-named 
bankrupt,  and  that  the  payments  purporting  in  such 
account  to  have  been  made  by  said  trustees  have 
been  so  made  by  him.  And  he  asks  to  be  allowed  for 
said  payments  and  for  commissions  and  expenses  as 
charged  in  said  accounts. 


Trustee. 

Subscribed  and  sworn  to  before  me  at 

in  said district  of ,  this 

dav  of ,  A.  [). 


(Olhcial  character.) 


ZU  COMMEBCIAL  LAW 

7orm  No.  51. — Order  Allowing  Account  and 
Discharging  Trustee. 

In  the  District  Court  of  the  United  States  for  the 
District  of 

In  the  matter  of  ^ 

lln  Bankruptcy. 

Bankrupt. 

The  foregoing  account  having  been  presented  for 
allowance,  and  having  been  examined  and  found  cor- 
rect, it  is  ordered,  that  the  same  be  allowed,  and  that 
the  said  trustee  be  discharged  of  his  trust. 


Referee  in  Bankruptcy. 


APPE:J^DIX  B  365 

Form  No.  52. — Petition  for  Removal  of  Trustee. 

In  the  District  Court  of  the  United  States  for  the 
District  of  

In  the  matter  of  >. 

lln  Bankruptcy. 

Bankrupt. 

To  the  Honorable : 

Judge  of  the  District  Court  for  the 

District  of : 

The  Petition  of ,  one 

of  the  creditors  of  said  bankrupt,  respectfully  rep- 
resents that  it  is  for  the  interest  of  the  estate  of  said 

bankrupt  that ,  heretofore 

appointed  trustee  of  said  bankrupt's  estate,  should 
be  removed  fi'om  his  trust,  for  the  causes  following, 
to  wit:  (here  set  forth  the  particular  cause  or  causes 
for  which  such  removal  is  requested). 

Wherefore pray  that 

notice  may  be  served  upon  said , 

trustee  as  aforesaid,  to  show  cause,  at  such  time  as 
may  be  fixed  by  the  court,  why  an  order  should  not 
be  made  removing  him  from  said  trust. 


366  COMMEECIAL  LAW 

Form  No.  53. — Notice  of  Petition  for  Removal  of 

Trustee. 

In  the  District  Court  of  the  United  States  for  the 
District  of 


In  the  matter  of 


Bankrupt.    , 


In  Bankruptcy. 


At ,  on  the day  of , 

A.  D 

Trustee  of  the  estate  of , 

bankrupt: 

You  are  hereby  notified  to  appear  before  this 

court,  at ,  on  the day  of , 

A.  D.      .  . .,  at o'clock  . . .  .m.,  to  show  cause 

(if  any  you  have)  why  you  should  not  be  removed 
from  your  trust  as  trustee  as  aforesaid,  according  to 

the  prayer  of  the  petition  of ,  one 

of  the  creditors  of  said  bankrupt,  filed  in  this  court 

on  the day  of ,  A.  D.       . . . , 

in  which  it  is  alleged  (here  insert  the  allegation  of 
the  petition). 

Clerk. 


APPENDIX  B  367 

Form  No.  54.— Order  for  Removal  of  Trustee. 

In  the  District  Court  of  the  United  States  for  the 
District  of 

In  the  matter  of 

^In  Bankruptcy. 

Bankrupt. 

Whereas ,  of ,  did 

on  the day  of ,  A.  D.      . . . , 

present  his  petition  to  this  court,  praying  that  for 

the  reasons  therein  set  forth, ,  the 

trustee  of  the  estate  of  said ,  bank- 
rupt, might  be  removed: 

Now,  therefore,  upon  reading  the  said  petition 

of  the  said ,  and  the  evidence 

submitted  therewith,  and  upon  hearing  counsel  on 
behalf  of  said  petitioner  and  counsel  for  the  trustee, 
and  upon  the  evidence  submitted  on  behalf  of  said 
trustee, 

It  is  ordered  that  the  said be 

removed  from  the  trust  as  trustee  of  the  estate  of 
said  bankru^Dt,  and  that  the  costs  of  the  said  peti- 
tioner incidental  to  said  petition  be  paid  by  said 

,  trustee  (or,  out  of  the  estate 

of  said ,  subject  to  prior  charges). 

Witness  the  Honorable ,  judge 

of  the  said  court,  and  the  seal  thereof,  at , 

in  said  District,  on  the day  of , 

A.  D 


[  Seal  of  ]  Clerk, 

[the  court.] 


368  COMMEECIAL  LAW 

Form  No.  55. — Order  for  Choice  of  New  Trustee. 

In  the  District  Court  of  the  United  States  for  th© 
District  of 


In  the  matter  of 


►In  Bankruptcy. 


Bankrupt.  , 

At ,  on  the day  of , 

A.  D 

Whereas  by  reason  of  the  removal  (or  death  or 

resignation)  of ,  heretofore 

appointed  trustee  of  the  estate  of  said  bankrupt  a 
vacancy  exists  in  the  office  of  said  trustee. 

It  is  ordered,  that  a  meeting  of  the  creditors  of 

said  bankrupt  be  held  at ,  in , 

in  said  District,  on  the day  of , 

A.  D.  . . . ,  for  the  choice  of  a  new  trustee  of  said 
estate. 

And  it  is  further  ordered  that  notice  be  given  to 
said  creditors,  of  the  time,  place,  and  purpose  of  said 
meeting,  by  letter  to  each,  to  be  deposited  in  the 
mail  at  least  ten  days  before  that  day. 


Referee  in  Bankruptcy. 


APPENDIX  B  36d 

Form  No.  56. — Certificate  by  Referee  to  Judge. 

In  the  District  Court  of  the  United  States  for  the 
District  of 


In  the  matter  of  1 


Bankrupt. 


In  Bankruptcy. 


I,   ,  one  of  the  referees  of 

said  court  in  bankruptcy,  do  hereby  certify  that  in 
the  course  of  the  proceedings  in  said  cause  before 
me  the  following  question  arose  pertinent  to  the  said 
proceedings;  (here  state  the  question,  a  summary  of 
the  evidence  relating  thereto,  and  the  finding  and 
order  of  the  referee  thereon). 

And  the  said  question  is  certified  to  the  judge 
for  his  opinion  thereon. 

Dated  at ,  the day  of 

A.  D 


Beferee  in  Bankruptcy. 


24 


370  COMMERCIAL  LAW 


Form  No.  57. — Bankrupt's  Petition  for  Discharge. 

In  the  District  Court  of  the  United  States  for  the 
District  of 


In  the  matter  of 


Bankrupt. 


*In  Bankruptcy. 


To  the  Honorable , 

Judge  of  the  District  Court  of  the  United  States 

for  the  District  of of and  State 

of ,  in  said  District,  respectfully  repre- 
sents that  on  the day  of last  past, 

he  was  duly  adjudged  bankrupt  under  the  Acts  of 
Congress  relating  to  bankruptcy;  that  he  has  duly 
surrendered  all  his  property  and  rights  of  property, 
and  has  fully  complied  with  all  the  requirements  of 
said  Acts  and  of  the  orders  of  the  court  touching  his 
bankruptcy. 

Wherefore  he  prays  that  he  may  be  decreed  by 
the  com't  to  have  a  full  discharge  from  all  debts 
provable  against  his  estate  under  said  bankrupt  Acts, 
except  such  debts  as  are  excepted  by  law  from  such 
discharge. 

Dated  this day  of , 


Bankrupt. 


APPENDIX  B  371 


Order  of  Notice  Thereon. 

District  of — ss: 

On  this day  of ,  A.  D. 

on  reading  the  foregoing  petition,  it  is 

Ordered  by  the  court  that  a  hearing  be  had  upon 
the  same  on  the day  of ,  A.  D. 

....  before  said  court,  at ,  in  said  Dis- 
trict at o'clock  in  the noon;  and  that 

notice  thereof  be  published  in ,  a 

newspaper  printed  in  said  District,  and  that  all 
known  creditors  and  other  persons  in  interest  may 
appeal'  at  the  said  time  and  place  and  show  cause, 
if  any  they  have,  why  the  prayer  of  the  said  peti- 
tioner should  not  be  granted. 

And  it  is  further  ordered  by  the  court,  that  the 
clerk  shall  send  by  mail  to  all  known  creditors  copies 
of  said  petition  and  this  order,  addressed  to  them 
at  their  places  of  residence  as  stated. 

Witness  the  Honorable ,  judge 

of  the  said  court  and  the  seal  thereof,  at , 

in  said  District,  on  the day  of , 

A.  D. 


Clerk. 
[  Seal  of  ] 
[the  court.] 

hereby  deposes,  on  oath,  that 

the  foregoing  order  was  published  in  the 

on  the  following days,  viz. : 


373  COMMERCIAL  LAW 

On  the day  of that  on  the 

day  of in  the  year 

District  of 

Personally  appeared ,  and  made 

oath  that  the  foregoing  statement  by  him  subscribed 
is  true. 


> 

(Official  character.) 

I  hereby  certify  that  I  have  on  this day 

of ,  A.  D.        . .  sent  by  mail  copies 

of  the  above  order,  as  therein  directed. 

Clerk. 


'APPENDIX  C  373 

Form  No.  58. — Specification  of  Grounds  of  Opposi- 
tion to  Bankrupt's  Discharge. 

In  the  District  Court  of  the  United  States  for  the 
District  of 


In  the  matter  of 
Bankrupt. 


'In  Bankruptcy. 


,  of ,  in  the  County 

of and  State  of ,  a 

party  interested  in  the  estate  of  said , 

bankrupt,  do  hereby  oppose  the  granting  to  him  of 
a  discharge  from  his  debts,  and  for  the  grounds  of 
such  oposition  do  file  the  following  specification: 
(Here  specify  the  grounds  of  opposition.) 

• > 

Creditor. 


374  COMMERCIAL  LAW 

Porm  No.  59. — Discharge  of  Bankrupt. 

District  Court  of  the  United  States, 

District  of 

Wliereas,  ,  of 

in  said  District,  has  been  duly  adjudged  a  bankrupt 
under  the  Acts  of  Congress  relating  to  bankruptcy, 
and  appears  to  have  conformed  to  all  the  require- 
ments of  law  in  that  behalf,  it  is  thereof  ordered  by 

this  court  that  said be  discharged 

from  all  debts  and  claims  which  are  made  provable 
by  said  Acts  against  his  estate,  and  which  existed 

on  the day  of ,  A.  D. 

on  which  day  the  petition  for  adjudication  was  filed 
him ;  excepting  such  debts  as  are  by  law  ex- 
cepted from  the  operation  of  a  discharge  in  bank- 
ruptcy. 

Witness  the  Honorable ,  judge  of 

said  District  Court,  and  the  seal  thereof  this day 

of ,  A.  D. 


Clerk. 
[  Seal  of  ] 
[the  court.] 


APPENDIX  B  375 

Form  No.  60.— Petition  for  Meeting  to  Consider 
Composition. 

In  the  District  Coui't  of  the  United  States  for  the 
District  of 


In  the  matter  of  1 


Bankrupt.  . 


In  Bankruptcy. 


To  the  Honorable , 

Judge  of  the  District  Court  of  the  United  States 
for  the District  of : 

The  above  named  bankrupt  respectfully  repre- 
sents that  a  composition  of per  cent  upon  all 

unsecured  debts,  not  entitled  to  a  priority 

in  satisfaction  of debts  has  been 

proposed  by to 

creditors,  as  provided  by  the  Acts  of  Congress  relat- 
ing to  bankruptcy  and verily  believe 

that  the  said  composition  will  be  accepted  by  a  ma- 
jority in  number  and  in  value  of 

creditors  whose  clauns  are  allowed. 

Wherefore,  he  prays  that  a  meeting  of 

creditors  may  be  duly  called  to  act  upon  said  pro- 
posal for  a  composition  according  to  the  provisions 
of  said  Acts  and  the  rules  of  court. 

> 

Bankrupt. 


37«  COMMERCIAL  LAW 

Form  No.  61. — ^Application  for  Confirmation  of 
Composition. 

In  the  District  Court  of  the  United  States  for  the 
District  of 


In  the  matter  of 


Jn  Bankruptcy. 


Bankrupt. 

To  the  Honorable , 

Judge  of  the  District  Court  of  the  United  States, 

for  the District  of 

At ,  in  said  District,  on  the 

day  of ,  A.  D.        . . ,  now 

comes ,  the  above-named  bank- 
rupt, and  respectfully  represents  to  the  court  that, 
after  he  had  been  examined  in  open  court  (or,  at  a 
meeting  of  his  creditors)  and  had  filed  in  court  a 
schedule  of  his  property  and  a  list  of  his  creditors, 
as  required  by  law,  he  offered  terms  of  composition 
to  his  creditors,  which  terms  have  been  accepted  in 
writing  by  a  majority  in  number  of  all  creditors 
whose  claims  have  been  allowed,  which  munber 
represents  a  majority  in  amount  of  such  claims;  that 
the  consideration  to  be  paid  by  the  bankrupt  to  his 
creditors,  the  money  necessary  to  pay  all  debts  which 
have  priority,  and  the  costs  of  the  proceedings, 

amounting  in  all  to  the  sum  of dollars, 

has  been  deposited,  subject  to  the  order  of  the  judge, 
in  the National  Bank,  of , 


APPENDIX  B  377 

a  designated  depository  of  money  in  bankruptcy 
cases. 

Wherefore  the  said respectfully 

asks  that  the  said  composition  may  be  confirmed  by 
the  court. 

> 

Bankrupt. 


378  COMMERCIAL  LAW 


Form  No.  62. — Order  Confirming  Composition. 

In  the  District  Court  of  the  United  States  for  the 
District  of 


In  the  matter  of 


Bankrupt. 


In  Bankruptcy. 


An  application  for  the  confirmation  of  the  com- 
position offered  by  the  bankrupt  having  been  filed 
in  court,  and  it  appearing  that  the  composition  has 
been  accepted  by  a  majority  in  number  of  creditors 
whose  claims  have  been  allowed  and  of  such  allowed 
claims;  and  the  consideration  and  the  money  required 
by  law  to  be  deposited  having  been  deposited  as 
ordered,  in  such  place  as  was  designated  by  the  judge 
of  said  court,  and  subject  to  his  order;  and  it  also 
appearing  that  it  is  for  the  best  interests  of  the 
creditors;  and  that  the  bankrupt  has  not  been  guilty 
of  any  of  the  acts  or  failed  to  perform  any  of  the 
duties  which  would  be  a  bar  to  his  discharge,  and 
that  the  offer  and  its  acceptance  are  in  good  faith 
and  have  not  been  made  or  procured  by  any  means, 
promises,  or  acts  contrary  to  the  Acts  of  Congress 
relating  to  bankruptcy;  It  is  therefore  ordered  that 
the  said  composition  be  and  it  is  hereby  confirmed. 

Witness  the  Honorable ,  judge 

of  said  court,  and  the  seal  thereof,  this day 

of ,  A.  D. 


[  Seal  of  ]  Clerk, 

[the  court.] 


APPENDIX  B  379 

Form  No.  63. — Order  of  Distribution  on  Composition. 

United  States  of  America. 

In  the  District  Court  of  the  United  States  for  the 
District  of  

In  the  matter  of  ^ 

Lin  Bankruptcy. 

Bankrupt. 

The  composition  offered  by  the  above-named 
bankrupt  in  this  case  having  been  duly  confirmed  by 
the  judge  of  said  court,  it  is  hereby  ordered  and 
decreed  that  the  distribution  of  the  deposit  shall  be 
made  by  the  clerk  of  the  court  as  follows,  to-wit: 
1st,  to  pay  the  several  claims  which  have  priority; 
2nd,  to  pay  the  costs  of  the  proceedings;  3rd,  to  pay, 
according  to  the  temis  of  the  composition,  the  several 
claims  of  general  creditors  which  have  been  allowed, 
and  appear  upon  a  list  of  allowed  claims,  on  the  files 
in  this  case,  which  list  is  made  a  part  of  this  order. 

Witness  the  Honorable ,  judge 

of  said  court,  and  the  seal  thereof,  this day 

of ,A.  D. 


Clerk. 
[  Seal  of  ] 
[the  court.] 


APPENDIX  C. 

THE  INTERSTATE  COMMERCE  ACT. 
AS  AMENDED. 

[Hepburn  bill  amendments  in  bold-faced  type.] 
An  Act  to  Regulate  Commerce. 

PARTIES  SUBJECT  TO  THE  ACT. 

Be  it  enacted  by  the  Senate  and  House  of  Repre- 
sentatives of  the  United  States  of  America  in  Con- 
gress assembled:  That  the  provisions  of  this  Act 
shall  apply  to  any  corporation  or  any  person  or  per- 
sons engaged  in  the  transportation  of  oil  or  other 
commodity,  except  water  and  except  natural  or  arti- 
ficial gas,  by  means  of  pipe  lines,  or  partly  by  pipe 
lines  and  partly  by  railroad,  or  partly  by  pipe  lines 
and  partly  by  water,  who  shall  be  considered  and 
held  to  be  common  carriers  within  the  meaning  and 
purpose  of  this  Act,  and  to  any  common  carrier  or 
carriers  engaged  in  the  transportation  of  passengers 
or  property  wholly  by  railroad  (or  partly  by  railroad 
and  partly  by  water  when  both  are  used  under  a 
common  control,  management  or  arrangement  for  a 
continuous  carriage  or  shipment),  from  one  State  or 
Territory  of  the  United  States,  or  the  District  of 
Columbia,  to  any  other  State  or  Territory  of  the 
United  States,  or  the  District  of  Columbia,  or  from 
one  place  in  a  Territory  to  another  place  in  the  same 

381 


382  COMMERCIAL  LAW 

Territory,  or  from  any  place  in  the  United  States  to 
an  adjacent  foreign  country,  or  from  any  place  in 
the  United  States  through  a  foreign  country  to  any 
other  place  in  the  United  States,  and  also  to  the 
transportation  in  like  manner  of  property  shipped 
from  any  place  in  the  United  States  to  a  foreign 
country  and  carried  from  such  place  to  a  port  of 
transshipment,  or  shipped  from  a  foreign  country  to 
any  place  in  the  United  States  and  carried  to  such 
place  from  a  port  of  entry  either  in  the  United  States 
or  an  adjacent  foreign  country:  Provided,  however, 
That  the  provisions  of  this  Act  shall  not  apply  to 
the  transportation  of  passengers  or  property,  or  to 
receiving,  delivering,  storage,  or  handling  of  prop- 
erty wholly  within  one  State  and  not  shipped  to  or 
from  a  foreign  country  from  or  to  any  State  or  Terri- 
tory as  aforesaid. 

The  term  ''common  carrier,'*  as  used  in  this  Act, 
shall  include  express  companies  and  sleeping  car 
companies.  The  term  "railroad,"  as  used  in  this 
Act,  shall  include  all  bridges  and  ferries  used  or 
operated  in  connection  with  any  railroad,  and  also 
all  the  road  in  use  by  any  corporation  operating  a 
railroad,  whether  owned  or  operated  under  a  con- 
tract, agreement,  or  lease,  and  shall  include  all 
switches,  spurs,  tracks,  and  terminal  facilities  of 
every  kind  used  or  necessary  in  the  transportation  of 
the  persons  or  property  designated  herein,  and  also 
all  freight  depots,  yards  and  grounds  used  or  neces- 
sary in  the  transportation  or  delivery  of  any  of  said 
property;  and  the  term  "transportation'*  shall  in- 
clude cars  and  other  vehicles  and  all  instrumental- 
ities and  facilities  of  shipment  or  carriage,  irrespec- 


APPENDIX  C  383 

tive  of  ownership  or  of  any  contract,  express  or  im- 
plied, for  the  use  thereof  and  all  services  in  connec- 
tion with  the  receipt,  delivery,  elevation,  and  transfer 
in  transit,  ventilation,  refrigeration  or  icing,  storage 
and  handling  of  property  transported;  and  it  shall 
be  the  duty  of  every  carrier  subject  to  the  provisions 
of  this  Act  to  provide  and  furnish  such  transporta- 
tion upon  reasonable  request  therefor,  and  to  estab- 
lish  through  routes  and  just  and  reasonable  rates 
applicable  thereto. 

All  charges  made  for  any  services  rendered  or  to 
be  rendered  in  the  transportation  of  passengers  or 
property  as  aforesaid,  or  in  connection  therewith, 
shall  be  just  and  reasonable;  and  every  unjust  and 
unreasonable  charge  for  such  service  or  any  part 
thereof  is  prohibited  and  declared  to  be  unlawful. 

No  common  carrier  subject  to  the  provisions  of 
this  Act  shall,  after  January  first,  nineteen  hundred 
and  seven,  directly  or  indirectly,  issue  or  give  any 
interstate  free  ticket,  free  pass,  or  free  transporta- 
tion for  passengers,  except  to  its  employees  and  their 
families,  its  officers,  agents,  surgeons,  physicians,  and 
attorneys  at  law;  to  ministers  of  religion,  traveling 
secretaries  of  railroad  Young  Men's  Christian  as- 
sociations, inmates  of  hospitals  and  charitable  and 
eleemosynary  institutions,  and  persons  exclusively 
engaged  in  charitable  and  eleemosynary  work;  to 
indigent,  destitute,  and  homeless  persons,  and  to  such 
persons  when  transported  by  charitable  societies  or 
hospitals,  and  the  necessary  agents  employed  in  such 
transportation;  to  inmates  of  the  national  homes  or 
state  homes  for  disabled  volunteer  soldiers,  and  of 
soldiers'  and  sailors'  homes,  including  those  about  to 


3g4  COMMEECIAL  LAW 

enter  and  those  returning  home  after  discharge  and 
boards  of  managers  of  such  homes;  to  necessary  care- 
takers of  live  stock,  poultry  and  fruit;  to  employees 
on  sleeping  cars,  express  cars,  and  the  linemen  of 
telegraph  and  telephone  companies;  to  railway  mail 
service  employees,  postoffice  inspectors,  customs  in- 
spectors and  immigration  inspectors;  to  newsboys  on 
trains,  baggage  agents,  witnesses  attending  any  legal 
investigation  in  which  the  common  carrier  is  inter- 
ested, persons  injured  in  wrecks  and  physicians  and 
nurses  attending  such  persons:  Provided,  That  this 
provision  shall  not  be  construed  to  prohibit  the  inter- 
change of  passes  for  the  ofl&cers,  agents,  and  em- 
ployees of  common  carriers,  and  their  families;  nor 
to  prohibit  any  common  carrier  from  carrying  pas- 
sengers free  with  the  object  of  providing  relief  in 
cases  of  general  epidemic,  pestilence,  or  other  calami- 
tous visitation.  Any  common  carrier  violating  this 
provision  shall  be  deemed  guilty  of  a  misdemeanor, 
and  for  each  offense,  on  conviction,  shall  pay  to  the 
United  States  a  penalty  of  not  less  than  one  hundred 
dollars  nor  more  than  two  thousand  dollars,  and  any 
person,  other  than  the  persons  excepted  in  this  pro- 
vision, who  uses  any  such  interstate  free  ticket,  free 
pass,  or  free  transportation,  shall  be  subject  to  a  like 
penalty.  Jurisdiction  of  offenses  under  this  provi- 
sion shall  be  the  same  as  that  provided  for  offenses 
in  an  Act  entitled  "An  Act  to  further  regulate  com- 
merce with  foreign  nations  and  among  the  States," 
approved  February  nineteenth,  nineteen  hundred  and 
three,  and  any  amendment  thereof. 

From  and  after  May  first,  nineteen  hundred  and 
eight,  it  shaU  be  unlawful  for  any  railroad  company 


APPEXDIX  C  385 

to  transport  from  any  State,  Territory,  or  District 
of  Columbia,  to  any  other  State,  Territory,  or  the 
District  of  Columbia,  or  to  any  foreign  country,  any 
article  or  commodity,  other  than  timber  and  the 
manufactured  products  thereof,  manufactured, 
mined,  or  produced  by  it,  or  imder  its  authority,  or 
which  it  may  own  in  whole,  or  in  part,  or  in  which  it 
may  have  any  interest  direct  or  indirect  except  such 
articles  or  commodities  as  may  be  necessary  and  in- 
tended for  its  use  in  the  conduct  of  its  business  as 
a  common  carrier. 

Any  common  carrier  subject  to  the  provisions  of 
this  Act,  upon  application  of  any  lateral,  branch  line 
of  railroad,  or  of  any  shipper  tendering  interstate 
traffic  for  transportation,  shall  construct,  maintain, 
and  operate  upon  reasonable  terms  a  switch  connec- 
tion with  any  such  lateral,  branch  line  of  railroad, 
or  private  side  track  which  may  be  constructed  to 
connect  with  its  railroad,  where  such  connection  is 
reasonably  practicable  and  can  be  put  in  with  safety 
and  will  furnish  sufficient  business  to  justify  the  con- 
struction and  maintenance  of  the  same;  and  shall 
furnish  cars  for  the  movement  of  such  traffic  to  the 
best  of  its  ability  without  discrimination  in  favor  of 
or  against  any  such  shipper.  If  any  common  carrier 
shall  fail  to  install  and  operate  any  such  switch  or 
connection  as  aforesaid,  on  application  therefor  in 
writing  by  any  shipper,  such  shipper  may  make  com- 
plaint to  the  Commission,  as  provided  in  section  thir- 
teen of  this  Act,  and  the  Commission  shall  hear  and 
investigate  the  same  and  shall  determine  as  to  the 
safety  and  practicability  thereof  and  justification  and 
reasonable  compensation  therefor,  and  the  Commis- 


386  COMMERCIAL  LAW 

sion  may  make  an  order,  as  provided  in  section  fifteen 
of  this  Act,  directing  the  common  carrier  to  comply 
with  the  provisions  of  this  section  in  accordance  with 
such  order  and  such  order  shall  be  enforced  as  here- 
inafter provided  for  the  enforcement  of  all  other 
orders  by  the  Commission,  other  than  orders  for  the 
payment  of  money. 

[Section  I.  That  the  provisions  of  this  Act  shall  apply- 
to  any  common  carrier  or  carriers  engaged  in  the  transpor- 
tation of  passengers  or  property  wholly  by  railroad,  or 
partly  by  railroad  and  partly  by  water  when  both  are  used, 
under  a  common  control,  management,  or  arrangement,  for 
a  continuous  carriage  or  shipment,  from  one  State  or  Terri- 
tory of  the  United  States,  or  the  District  of  Columbia,  to 
any  other  State  or  Territory  of  the  United  States,  or  the 
District  of  Columbia,  or  from  any  place  in  the  United  States 
to  an  adjacent  foreign  country,  or  from  any  place  in  the 
United  States  through  a  foreign  country  to  any  other  place 
in  the  United  States,  and  also  to  the  transportation  in  like 
Q  manner  of  property  shipped  from  any  place  in  the  United 
^  States  to  a  foreign  country  and  carried  from  such  place  to 
H  a  port  of  transshipment,  or  shipped  from  a  foreign  country 
^  to  any  place  in  the  United  States  and  carried  to  such  place 
from  a  port  of  entry  either  in  the  United  States  or  an  adja- 
cent foreign  country:  Provided,  however,  That  the  pro- 
visions of  this  Act  shall  not  apply  to  the  transportation  of 
passengers  or  property,  or  to  the  receiving,  delivering, 
storage,  or  handling  of  property,  wholly  within  one  State, 
and  not  shipped  to  or  from  a  foreign  country  from  or  to 
any  State  or  Territory  as  aforesaid. 

The  term  "railroad"  as  used  in  this  Act  shall  include  all 
bridges  and  ferries  used  or  operated  in  connection  with  any 
railroad,  and  also  all  the  road  in  use  by  any  corporation 
operating  a  railroad,  whether  owned  or  operated  under  a 
contract,  agreement,  or  lease;  and  the  term  "transporta- 


14 


APPENDIX  C  387 

tion"   shall   include   all  instrumentalities   of  shipment   or 

carriage. 
^  AH  charges  made  for  any  service  rendered  or  to  be  ren- 
g  dered  in  the  transportation  of  passengers  or  property  as 
g  aforesaid,  or  in  connection  therewith,  or  for  the  receiving, 
g  delivering,  storage,  or  handling  of  such  property,  shall  be 
^  reasonable  and  just;  and  every  unjust  and  unreasonable 

charge  for  such  service  is  prohibited  and  declared  to  be 

unlawful.] 

Unjust  Discrimination  Defined  and  Forbidden. 

Section  2.  That  if  any  common  carrier  subject 
to  the  provisions  of  this  Act,  shall,  directly  or  indi- 
rectly, by  any  special  rate,  rebate,  drawback,  or 
other  device,  charge,  demand,  collect,  or  receive  from 
any  person  or  persons  a  greater  or  less  compensation 
for  any  service  rendered,  or  to  be  rendered,  in  the 
transportation  of  passengers  or  property,  subject  to 
the  provisions  of  this  Act,  than  it  charges,  demands, 
collects,  or  receives  from  any  other  person  or  persons 
for  doing  for  him  or  them  a  like  and  contempo- 
raneous service  in  the  transportation  of  a  like  kind 
of  traffic  under  substantially  similar  circumstances 
and  conditions,  such  common  carrier  shall  be  deemed 
guilty  of  unjust  discrimination,  which  is  hereby  pro- 
hibited and  declared  to  be  unlawful. 

Undue  or  Unreasonable  Preference  or  Advantage 

Forbidden. 

Section  3.  That  it  shall  be  unlawful  for  any 
common  caiTier  subject  to  the  provisions  of  this  Act 
to  make  or  give  any  undue  or  unreasonable  prefer- 
ence or  advantage  to  any  particular  person,  com- 


388  COMMERCIAL  LAW 

pany,  firm,  corporation,  or  locality,  or  any  particular 
description  of  traffic,  in  any  respect  whatsoever,  or 
to  subject  any  particular  person,  company,  firm, 
corporation,  or  locality,  or  any  particular  descrip- 
tion of  traffic,  to  any  undue  or  imreasonable  preju- 
dice or  disadvantage  in  any  respect  whatsoever. 

Every  common  carrier  subject  to  the  provisions 
of  this  Act  shall,  according  to  their  respective  pow- 
ers, afford  all  reasonable,  proper,  and  equal  facili- 
ties for  the  interchange  of  traffic  between  their 
respective  lines,  and  for  the  receiving,  forwarding, 
and  delivering  of  passengers  and  property  to  and 
from  their  several  lines  and  those  connecting  there- 
with, and  shall  not  discriminate  in  their  rates  and 
charges  between  such  connecting  lines;  but  this  shall 
not  be  construed  as  requiring  any  such  common  car- 
rier to  give  the  use  of  its  tracks  or  terminal  facilities 
to  another  carrier  engaged  in  like  business. 

Long  and  Short  Haul  Provision. 

Section  4.  That  it  shall  be  unlawful  for  any 
common  carrier  subject  to  the  provisions  of  this  Act 
to  charge  or  receive  any  greater  compensation  in 
the  aggregate  for  the  transportation  of  passengers 
or  of  like  kind  of  property,  under  substantially  simi- 
lar circumstances  and  conditions,  for  a  shorter  than 
for  a  longer  distance  over  the  same  line,  in  the  same 
direction,  the  shorter  being  included  within  the 
longer  distance;  but  this  shall  not  be  construed  as 
authorizing  any  common  carrier  within  the  terms  of 
this  Act  to  charge  and  receive  as  great  compensa- 
tion for  a  shorter  as  for  a  longer  distance :  Provided, 
however.  That  upon  application  to  the  Commission 


APPENDIX  C  389 

appointed  under  the  provisions  of  this  Act,  such 
common  carrier  may,  in  special  cases,  after  investi- 
gation by  the  Commission,  be  authorized  to  charge 
less  for  longer  than  for  shorter  distances  for  the 
transportation  of  passengei-s  or  property;  and  the 
Commission  may  from  time  to  time  prescribe  the 
extent  to  which  such  designated  common  carrier 
may  be  relieved  from  the  operation  of  this  section 
of  this  Act. 

Pooling  of  Freights  and  Division  of  Earnings 
Forbidden. 

Section  5.  That  it  shall  be  unlawful  for  any  com- 
mon carrier  subject  to  the  provisions  of  this  Act  to 
enter  into  any  contract,  agreement,  or  combination 
with  any  other  common  carrier  or  carriers  for  the 
pooling  of  freights  of  different  and  competing  rail- 
roads, or  to  divide  between  them  the  aggregate  or 
net  proceeds  of  the  earnings  of  such  railroads,  or  any 
portion  thereof;  and  in  any  case  of  an  agreement  for 
the  pooling  of  freights  as  aforesaid,  each  day  of  its 
continuance  shall  be  deemed  a  sex^arate  offense. 

Published  Tariffs  Must  Show  All  Rates,  Fares  and 

Charges. 

Section  6.  That  every  common  carrier  subject 
to  the  provisions  of  this  Act  shall  file  with  the  Com- 
mission created  by  this  Act  and  print  and  keep  open 
to  public  inspection  schedules  showing  all  the  rates, 
fares,  and  charges  for  transportation  between  differ- 
ent points  on  its  own  route  and  between  points  on 
its  own  route  and  points  on  the  route  of  any  other 


390  COMMERCIAL  LAW 

carrier  by  railroad,  by  pipe  line,  or  by  water  when 
a  through  route  or  joint  rate  have  been  established. 
If  no  joint  rate  over  the  through  route  has  been  es- 
tablished, the  several  carriers  in  such  through  route 
shall  file,  print,  and  keep  open  to  public  inspection, 
as  aforesaid,  the  separately  established  rates,  fares, 
and  charges  applied  to  the  through  transportation. 
The  schedules  printed  as  aforesaid  by  any  such  com- 
mon carrier  shall  plainly  state  the  places  between 
which  property  and  passengers  will  be  carried,  and 
shall  contain  the  classification  of  freight  in  force, 
and  shall  also  state  separately  all  terminal  charges, 
storage  charges,  icing  charges,  and  all  other  charges 
which  the  Commission  may  require,  all  privileges  or 
facilities  granted  or  allowed  and  any  rules  or  regu- 
lations which  in  any  wise  change,  affect,  or  deter- 
mine any  part  of  the  aggregate  of  such  aforesaid 
rates,  fares,  and  charges,  or  the  value  of  the  service 
rendered  to  the  passenger,  shipper,  or  consignee. 
Such  schedules  shall  be  plainly  printed  in  large  type, 
and  copies  for  the  use  of  the  public  shall  be  kept 
posted  in  two  public  and  conspicuous  places  in  every 
depot,  station,  or  office  of  such  carrier  where  pas- 
sengers or  freight,  respectively,  are  received  for 
transportation,  in  such  form  that  they  shall  be  acces- 
sible to  the  public  and  can  be  conveniently  inspected. 
The  provisions  of  this  section  shall  apply  to  all  traffic, 
transportation,  and  facilities  defined  in  this  Act. 

Any  common  carrier  subject  to  the  provisions  of 
this  Act  receiving  freight  in  the  United  States  to 
be  carried  through  a  foreign  country  to  any  place 
in  the  United  States  shall  also  in  like  manner  print 
and  keep  open  to  public  inspection,  at  every  depot 


APPENDIX  C  391 

or  ofl&ce  where  such  freight  is  received  for  shipment, 
schedules  showing  the  through  rates  established  and 
charged  by  such  common  carrier  to  all  points  in  the 
United  States  beyond  the  foreign  country  to  which 
it  accepts  freight  for  shipment;  and  any  freight 
shipped  from  the  United  States  through  a  foreign 
country  into  the  United  States  the  through  rate  on 
which  shall  not  have  been  made  public,  as  required 
by  this  Act,  shall,  before  it  is  admitted  into  the 
United  States  from  said  foreign  country,  be  subject 
to  customs  duties  as  if  said  freight  were  of  foreign 
production. 

No  change  shall  be  made  in  the  rates,  fares,  and 
charges  or  joint  rates,  fares,  and  charges  which  have 
been  filed  and  published  by  any  common  carrier  in 
compliance  with  the  requirements  of  this  section, 
except  after  thirty  days*  notice  to  the  Commission 
and  to  the  public  published  as  aforesaid,  which  shall 
plainly  state  the  changes  proposed  to  be  made  in  the 
schedule  then  in  force  and  the  time  when  the  changed 
rates,  fares,  or  charges  will  go  into  effect;  and  the 
proposed  changes  shall  be  shown  by  printing  new 
schedules,  or  shall  be  plainly  indicated  upon  the 
schedules  in  force  at  the  time  and  kept  open  to  public 
inspection:  Provided,  That  the  Commission  may, 
in  its  discretion  and  for  good  cause  show,  allow 
changes  upon  less  than  the  notice  herein  specifies, 
or  modify  the  requirements  of  this  section  in  respect 
to  publishing,  posting,  and  filing  of  tariffs,  either  in 
particular  instances  or  by  a  general  order  applicable 
to  special  or  peculiar  circumstances  or  conditions. 

The  names  of  the  several  carriers  which  are  par- 
ties to  any  joint  tariff  shall  be  specified  therein,  and 


392  COMMEECIAL  LAW 

each  of  the  parties  thereto,  other  than  the  one  filing 
the  same,  shall  file  with  the  Commission  such  evi- 
dence of  concurrence  therein  or  acceptance  thereof 
as  may  be  required  or  approved  by  the  Commission, 
and  where  such  evidence  of  concurrence  or  accept- 
ance is  filed  it  shall  not  be  necessary  for  the  carriers 
filing  the  same  to  also  file  copies  of  the  tariffs  in 
which  they  are  named  as  parties. 

Every  common  carrier  subject  to  this  Act  shall 
also  file  with  said  Commission  copies  of  all  contracts, 
agreements,  or  arrangements  with  other  common 
carriers  in  relation  to  any  traffic  affected  by  the  pro- 
visions of  this  Act  to  which  it  may  be  a  party. 

The  Commission  may  determine  and  prescribe  the 
form  in  which  the  schedules  required  by  this  section 
to  be  kept  open  to  public  inspection  shall  be  prepared 
and  arranged  and  may  change  the  form  from  time  to 
time  as  shall  be  found  expedient. 

No  carrier,  unless  otherwise  provided  by  this 
Act,  shall  engage  or  participate  in  the  transporta- 
tion of  passengers  or  property,  as  defined  in  this 
Act,  unless  the  rates,  fares,  and  charges  upon  which 
the  same  are  transported  by  said  carrier  have  been 
filed  and  published  in  accordance  with  the  provisions 
of  this  Act;  nor  shall  any  carrier  charge  or  demand 
or  collect  or  receive  a  greater  or  less  or  different 
compensation  for  such  transportation  of  passengers 
or  property,  or  for  any  service  in  connection  there- 
with, between  the  points  named  in  such  tariffs  than 
the  rates,  fares,  and  charges  which  are  specified  in 
the  tariff  filed  and  in  effect  at  the  time;  nor  shall 
any  carrier  refund  or  remit  in  any  manner  or  by  any 
device  any  portion  of  the  rates,  fares,  and  charges 


APPENDIX  G  393 

SO  specified,  nor  extend  to  any  shipper  or  person  any 
privileges  or  facilities  in  the  transportation  of  pas- 
sengers or  property,  except  such  as  are  specified  in 
such  tariffs:  Provided,  That  wherever  the  word 
"carrier"  occurs  in  this  Act  it  shall  be  held  to  mean 
"common  carrier." 

That  in  time  of  war  or  threatened  war  preference 
and  precedence  shall,  upon  the  demand  of  the  Presi- 
dent of  the  United  States,  be  given,  over  all  other 
traffic,  to  the  transportation  of  troops  and  material 
of  war,  and  carriers  shall  adopt  every  means  within 
their  control  to  facilitate  and  expedite  the  military 
traffic. 

[Section  6.     That  every  common  carrier  subject  to  the 
provisions  of  this  Act  shall  print  and  keep  open  to  public 
inspection  schedules  showing  the  rates  and  fares  and  charges 
for  the  transportation   of  passengers  and  property  which 
any  such  common  carrier  has  established  and  which  are  in 
force  at  the  time  upon  its  route.    The  schedules  printed  as 
aforesaid  by  any  such  common  carrier  shall  plainly  state  the 
places  upon  its  railroad  between  which  property  and  pas- 
sengers  will  be  carried,  and  shall  contain  the  classification 
w  of  freight   in   force,   and   shall   also   state  separately   the 
^  terminal  charges  and  any  rules  or  regulations  which  in*ariy 
g  wise  change,  affect,  or  determine  any  part  or  the  aggregate 
^  of    such    aforesaid    rates    and    fares    and    charges.      Such 
schedules  shall  be  plainly  printed  in  large  type,  and  copies 
for  the  use  of  the  public  shall  be  posted  in  two  public  and 
conspicuous  places,  in  every  depot,  station,  or  office  of  such 
carrier  where  passengers  or  freight,  respectively,  are  re- 
ceived for  transportation,  in  such  form  that  they  shall  be 
accessible  to  the  public  and  can  be  conveniently  inspected. 
Any  common  carrier  subject  to  the  provisions  of  this 
Act  receiving  freight  in  the  United  States  to  be  carried 
through  a  foreign  country  to  any  place  in  the  United  States 


394  COMMERCIAL  LAW 

shall  also  in  like  manner  print  and  keep  open  to  public 
inspection,  at  every  depot  or  office  where  such  freight  is 
received  for  shipment,  schedules  showing  the  through  rates 
established  and  charged  by  such  common  carrier  to  all 
points  in  the  United  States  beyond  the  foreign  country  to 
which  it  accepts  freight  for  shipment;  and  any  freight 
shipped  from  the  United  States  through  a  foreign  country 
into  the  United  States,  the  through  rate  on  which  shall  not 
have  been  made  public  as  required  by  this  Act,  shall,  before 
it  is  admitted  into  the  United  States,  from  said  foreign 
country,  be  subject  to  customs  duties  as  if  said  freight  were 
of  foreign  production;  and  any  law  in  conflict  with  this 
section  is  hereby  repealed. 

No   advance   shall   be   made   in  the   rates,   fares,    and 
charges  which  have  been  established  and  published  as  afore- 
said by  any  common  carrier  in  compliance  with  the  require- 
ments of  this  section,  except  after  ten  days'  public  notice, 
Q  which  shall  plainly  state  the  changes  proposed  to  be  made 
H  in   the  schedule   then   in   force,   and   the   time   when   the 
n  increased  rates,  fares,  or  charges  will  go  into  effect;  and 
g  the   proposed    changes   shall   be    shown   by   printing   new 
schedules,  or  shall  be  plainly  indicated  upon  the  schedules 
in  force  at  the  time  and  kept  open  to  public  inspection. 
Reductions  in  such  published  rates,  fares,  or  charges  shall 
only  be  made  after  three  days'  previous  public  notice,  to  be 
given  in  the  same  manner  that  notice  of  an  advance  in  rates 
must  be  given. 

And  when  any  such  common  carrier  shall  have  estab- 
lished and  published  its  rates,  fares,  and  charges  in  compli- 
ance with  the  provisions  of  this  section,  it  shall  be  unlawful 
for  such  common  carrier  to  charge,  demand,  collect,  or 
receive  from  any  person  or  persons  a  greater  or  less  com- 
pensation for  the  transportation  of  passengers  or  property, 
or  for  any  services  in  connection  therewith,  than  is  specified 
in  such  published  schedule  of  rates,  fares,  and  charges  as 
may  at  the  time  be  in  force. 

Every  common  carrier  subject  to  the  provisions  of  this 
Act  shall  file  with  the  Commission  hereinafter  provided  for 


14 


APPENDIX  C  395 

copies  of  its  schedules  of  rates,  fares,  and  charges  which 
have  been  established  and  published  in  compliance  with  the 
requirements  of  this  section,  and  shall  promptly  notify  said 
Commission  of  all  changes  made  in  the  same.  Every  such 
common  carrier  shall  also  file  with  said  Commission  copies 
of  all  contracts,  agreements,  or  arrangements  with  other 
common  carriers  in  relation  to  any  traffic  affected  by  the 
provisions  of  this  Act  to  which  it  may  be  a  party.  And  in 
cases  where  passengers  and  freight  pass  over  continuous 
lines  or  routes  operated  by  more  than  one  common  carrier, 
and  the  several  common  carriers  operating  such  lines  or 
routes  establish  joint  tariffs  of  rates  or  fares  or  charges  for 
Buch  continuous  lines  or  routes,  copies  of  such  joint  tariffs 
shall  also,  in  like  manner,  be  filed  with  said  Commission. 
Such  joint  rates,  fares,  and  charges  on  such  continuous 
lines  so  filed  as  aforesaid  shall  be  made  public  by  such 
common  carriers  when  directed  by  said  Commission,  in  so 
9  far  as  may,  in  the  judgment  of  the  Commission,  be  deemed 
d  practicable;  and  said  Commission  shall  from  time  to  time 
g  prescribe  the  measure  of  publicity  which  shall  be  given  to 
P§  such  rates,  fares,  and  charges,  or  to  such  part  of  them  as  it 
may  deem  it  practicable  for  such  common  carriers  to  pub- 
lish, and  the  places  in  which  they  shall  be  published. 

No  advance  shall  be  made  in  joint  rates,  fares,  and 
charges,  shown  upon  joint  tariffs,  except  after  ten  days' 
notice  to  the  Commission,  which  shall  plainly  state  the 
changes  proposed  to  be  made  in  the  schedule  then  in  force, 
and  the  time  when  the  increased  rates,  fares,  or  charges  will 
go  into  effect.  No  reduction  shall  be  made  in  joint  rates, 
fares,  and  charges,  except  after  three  days'  notice,  to  be 
given  to  the  Commission  as  is  above  provided  in  the  case  of 
an  advance  of  joint  rates.  The  Commission  may  make  public 
Bueh  proposed  advances,  or  such  reductions,  in  such  manner 
as  may,  in  its  judgment,  be  deemed  practicable,  and  may 
prescribe  from  time  to  time  the  measure  of  publicity  which 
common  carriers  shall  give  to  advances  or  reductions  in 
joint  tariffs. 

It  shall  be  unlawful  for  any  common  carrier,  party  to 


396  COMMERCIAL  LAW 

any  joint  tariff,  to  charge,  demand,  collect,  or  receive  from 
any  person  or  persons  a  greater  or  less  compensation  for  the 
transportation  of  persons  or  property,  or  for  any  service  in 
connection  therewith,  between  any  points  as  to  which  a  joint 
rate,  fare,  or  charge  is  named  thereon,  than  is  specified  in 
the  schedule  filed  with  the  Commission  in  force  at  the  time. 
The  Commission  may  determine  and  prescribe  the  form 
in  which  the  schedules  required  by  this  section  to  be  kept 
open  to  public  inspection  shall  be  prepared  and  arranged, 
and  may  change  the  form  from  time  to  time  as  shall  be 
found  expedient. 

If  any  such  common  carrier  shall  neglect  or  refuse  to  file 
or  publish  its  schedules  or  tariffs  of  rates,  fares,  and  charges 
as  provided  in  this  section,  or  any  part  of  the  same,  such 
common  carrier  shall,  in  addition  to  other  penalties  herein 
prescribed,  be  subject  to  a  writ  of  mandamus,  to  be  issued 
by  any  circuit  court  of  the  United  States  in  the  judicial  dis- 
g  trict  wherein  the  principal  office  of  said  common  carrier  is 
^  situated,  or  wherein  such  offense  may  be  committed,  and  if 
g  such  common  carrier  be  a  foreign  corporation  in  the  judicial 
§  circuit  wherein  such  common  carrier  accepts  traffic  and  has 
an  agent  to  perform  such  service,  to  compel  compliance  with 
the  aforesaid  provisions  of  this  section ;  and  such  writ  shall 
issue  in  the  name  of  the  people  of  the  LTnited  States,  at  the 
relation  of  the  Commissioners  appointed  under  the  provi- 
sions of  this  Act ;  and  the  failure  to  comply  with  its  require- 
ments shall  be  punishable  as  and  for  a  contempt;  and  the 
said  Commissioners,  as  complainants,  may  also  apply,  in 
any  such  circuit  court  of  the  United  States,  for  a  M-rit  of 
injunction  against  such  common  carrier,  to  restrain  such 
common  carrier  from  receiving  or  transporting  property 
among  the  several  States  and  Territories  of  the  United 
States,  or  between  the  United  States  and  adjacent  foreign 
countries,  or  between  ports  of  transshipment  and  of  entry 
and  the  several  States  and  Territories  of  the  United  States, 
as  mentioned  in  the  first  section  of  this  Act,  until  such 
common  carrier  shall  have  complied  with  the  aforesaid  pro- 
visions of  this  section  of  this  Act.] 


APPENDIX  C  397 

Continuous  Carriage  of  Freights. 

Section  7.  That  it  shall  be  unlawful  for  any  com- 
mon carrier  subject  to  the  provisions  of  this  Act  to 
enter  into  any  combination,  contract,  or  agreement, 
expressed  or  implied,  to  prevent,  by  change  of  time 
schedule,  carriage  in  different  cars,  or  by  other 
means  or  devices,  the  carriage  of  freights  from  being 
continuous  fi-om  the  place  of  shipment  to  the  place 
of  destination;  and  no  break  of  bulk,  stoppage,  or 
interruption  made  by  such  common  carrier  shall 
prevent  the  carriage  of  freights  from  being  and 
being  treated  as  one  continuous  carriage  from  the 
place  of  shipment  to  the  place  of  destination,  unless 
such  break,  stoppage,  or  interruption  was  made  in 
good  faith  for  some  necessary  purpose,  and  without 
any  intent  to  avoid  or  unnecessarily  interrupt  such 
continuous  carriage  or  to  evade  any  of  the  provisions 
of  this  Act. 

Liability  of  Common  Carriers  for  Damages, 

Section  8.  That  in  case  any  common  carrier 
subject  to  the  provisions  of  this  Act  shall  do,  cause 
to  be  done,  or  permit  to  be  done  an}^  act,  matter,  or 
thing  in  this  Act  prohibited  or  declared  to  be  un- 
lawful, or  shall  omit  to  do  any  act,  matter,  or  thing 
in  this  Act  required  to  be  done,  such  common  carrier 
shall  be  liable  to  the  person  or  persons  injured 
thereby  for  the  full  amount  of  damages  sustained  in 
consequence  of  any  such  violation  of  the  provisions 
of  this  Act,  together  with  a  reasonable  counsel  or 
attorney's  fee,  to  be  fixed  by  the  coui-t  in  every  case 


398  COMMERCIAL  LAW 

of  recovery,  which  attorney's  fee  shall  be  taxed  and 
collected  as  part  of  the  costs  in  the  case. 

Persons    Claiming    to    be    Damaged    May    Elect 

Whether  to  Complain  to  the  Commission  or 

Bring  Suit  in  a  United  States  Court. 

Section  9.  That  any  person  or  persons  claiming 
to  be  damaged  by  any  common  carrier  subject  to 
the  provisions  of  this  Act  may  either  make  com- 
plaint to  the  Commission  as  hereinafter  provided 
for,  or  may  bring  suit  in  his  or  their  own  behalf  for 
the  recovery  of  the  damages  for  which  such  com- 
mon carrier  may  be  liable  under  the  provisions  of 
this  Act,  in  any  district  or  circuit  com't  of  the  United 
States  of  competent  jurisdiction;  but  such  person 
or  persons  shall  not  have  the  right  to  pursue  both  of 
said  remedies,  and  must  in  each  case  elect  which  one 
of  the  two  methods  of  procedure  herein  provided  for 
he  or  they  will  adopt.  In  any  such  action  brought 
for  the  recovery  of  damages  the  court  before  which 
the  same  shall  be  pending  may  compel  any  director, 
officer,  receiver,  trustee,  or  agent  of  the  corporation 
or  company  defendant  in  such  suit  to  attend,  appear, 
and  testify  in  such  case,  and  may  compel  the  produc- 
tion of  the  books  and  papers  of  such  corporation  or 
company  party  to  any  such  suit;  the  claim  that  any 
such  testimony  or  evidence  may  tend  to  criminate 
the  person  giving  such  evidence  shall  not  excuse 
such  witness  from  testifying,  but  such  evidence  or 
testimony  shall  not  be  used  against  such  person  on 
the  trial  of  any  criminal  proceeding. 

Section  10.    That  any  common  carrier  subject  to 


APPENDIX  C  399 

the  provisions  of  this  Act,  or,  whenever  such  com- 
mon carrier  is  a  corporation,  any  director  or  officer 
thereof,  or  any  receiver,  trustee,  lessee,  agent,  or 
person,  acting  for  or  employed  by  such  corporation, 
who,  alone  or  with  any  other  corporation,  company, 
person,  or  party,  shall  wilfully  do  or  cause  to  be 
done,  or  shall  willingly  suJffer  or  permit  to  be  done, 
any  act,  matter,  or  thing  in  this  Act  prohibited  or 
declared  to  be  unlawful,  or  who  shall  aid  or  abet 
therein,  or  shall  wilfully  omit  or  fail  to  do  any  act, 
matter,  or  thing  in  this  Act  required  to  be  done,  or 
shall  cause  or  willingly  suffer  or  permit  any  •  act, 
matter,  or  thing  so  directed  or  required  by  this  Act 
to  be  done  not  to  be  so  done,  or  shall  aid  or  abet  any 
such  omission  or  failure,  or  shall  be  guilty  of  any 
infraction  of  this  Act,  or  shall  aid  or  abet  therein, 
shall  be  deemed  guilty  of  a  misdemeanor,  and  shall, 
upon  conviction  thereof  in  any  district  court  of  the 
United  States  within  the  jurisdiction  of  which  such 
offense  was  committed,  be  subject  to  a  fine  of  not  to 
exceed  five  thousand  dollars  for  each  offense:  Pro- 
vided, That  if  the  offense  for  which  any  person  shall 
be  convicted  as  aforesaid  shall  be  an  unlawful  dis- 
crimination in  rates,  fares,  or  charges,  for  the  trans- 
portation of  passengers  or  property,  such  person 
shall,  in  addition  to  the  fine  hereinbefore  provided 
for,  be  liable  to  imprisonment  in  the  penitentiary 
for  a  term  of  not  exceeding  two  years,  or  both  such 
fine  and  imprisonment  in  the  discretion  of  the  court. 
Any  common  carrier  subject  to  the  provisions  of 
this  Act,  or,  whenever  such  common  carrier  is  a  cor- 
poration, any  officer  or  agent  thereof,  or  any  person 
acting  for  or  employed  by  such  corporation,  who. 


400  COMMERCIAL  LAW 

by  means  of  false  billing,  false  classification,  false 
weighing,  or  false  report  of  weight,  or  by  any  other 
device  or  means,  shall  knowingly  and  mlfully  assist, 
or  shall  Avillingly  suffer  or  permit,  any  person  or  per- 
sons to  obtain  transportation  for  property  at  less 
than  the  regular  rates  then  established  and  in  force 
on  the  line  of  transportation  of  such  common  carrier, 
shall  be  deemed  guilty  of  a  misdemeanor,  and  shall, 
upon  conviction  thereof  in  any  court  of  the  United 
States  of  competent  jm'isdiction  within  the  district 
in  which  such  offense  was  committed,  be  subject  to  a 
fine  of  not  exceeding  five  thousand  dollars,  or  im- 
prisonment in  the  penitentiary  for  a  term  of  not 
exceeding  two  years,  or  both,  in  the  discretion  of  the 
court,  for  each  offense. 

Any  person  and  any  officer  or  agent  of  any  cor- 
poration or  company  who  shall  deliver  property  for 
transportation  to  any  common  carrier,  subject  to 
the  provisions  of  this  Act,  or  for  whom  as  consignor 
or  consignee  any  such  carrier  shall  transport  prop- 
erty, who  shall  knowingly  and  wilfully,  by  false 
billing,  false  classification,  false  weighing,  false  rep- 
resentation of  the  contents  of  the  package,  or  false 
report  of  weight,  or  by  any  other  device  or  means, 
whether  with  or  without  the  consent  or  connivance 
of  the  carrier,  its  agent  or  agents,  obtain  transpor- 
tation for  such  property  at  less  than  the  regular 
rates  then  established  and  in  force  on  the  line  of 
transportation,  shall  be  deemed  guilty  of  fraud, 
which  is  hereby  declared  to  be  a  misdemeanor,  and 
shall,  upon  conviction  thereof  in  any  court  of  the 
United  States  of  competent  jurisdiction  within  the 
district  in  which  such  offense  was  committed,  be 


APPENDIX  C  401 

subject  for  each  offense  to  a  fine  of  not  exceeding 
five  thousand  dollars  or  imprisonment  in  the  peniten- 
tiary for  a  term  of  not  exceeding  two  years,  or  both, 
in  the  discretion  of  the  court. 

If  any  such  person  or  any  officer  or  agent  of  any 
such  corporation  or  company,  shall,  by  payment  of 
money  or  other  thing  of  value,  solicitation,  or  other- 
wise, induce  any  common  carrier  subject  to  the  pro- 
visions of  this  Act,  or  any  of  its  officers  or  agents,  to 
discriminate  unjustly  in  his,  its,  or  their  favor  as 
against  any  other  consignor  or  consignee  in  the 
transportation  of  property,  or  shall  aid  or  abet  any 
common  carrier  in  any  such  unjust  discrimination, 
such  person  or  such  officer  or  agent  of  such  corpora- 
tion or  company  shall  be  deemed  guilty  of  a  misde- 
meanor, and  shall,  upon  conviction  thereof  in  any 
court  of  the  United  States  of  competent  jurisdiction 
within  the  district  in  which  such  offense  was  com- 
mitted, be  subject  to  a  fine  of  not  exceeding  five 
thousand  dollars,  or  imprisonment  in  the  peniten- 
tiary for  a  term  of  not  exceeding  two  years,  or  both, 
in  the  discretion  of  the  court,  for  each  offense;  and 
such  person,  coi^Doration,  or  company  shall  also,  to- 
gether with  said  common  carrier,  be  liable,  jointly  or 
severally,  in  an  action  on  the  case  to  be  brought  by 
any  consignor  or  consignee  discriminated  against  in 
any  court  of  the  United  States  of  competent  juris- 
diction for  all  damages  caused  by  or  resulting 
therefrom. 

Interstate  Commerce  Commission  Created. 

Section  11.  That  a  commission  is  hereby  created 
and  established  to  be  known  as  tlie  Interstate  Com- 

31 


402  COMMERCIAL  LAW 

merce  Commission,  which  shall  be  composed  of  five 
Commissioners,  who  shall  be  appointed  by  the  Presi- 
dent, by  and  with  the  advice  and  consent  of  the  Sen- 
ate. The  Commissioners  first  appointed  under  this 
Act  shall  continue  in  office  for  the  term  of  two,  three, 
four,  five  and  six  years,  respectively,  from  the  first 
day  of  January,  anno  Domini  eighteen  hundred  and 
eighty-seven,  the  term  of  each  to  be  designated  by 
the  President;  but  their  successors  shall  be  appointed 
for  terms  of  six  years,  except  that  any  person  chosen 
to  fill  a  vacancy  shall  be  appointed  only  for  the  unex- 
pired time  of  the  Commissioner  whom  he  shall  suc- 
ceed. Any  Commissioner  may  be  removed  by  the 
President  for  inefficiency,  neglect  of  duty,  or  mal- 
feasance in  office.  Not  more  than  three  of  the  Com- 
missioners shall  be  appointed  from  the  same  politi- 
cal party.  No  person  in  the  employ  of  or  holding  any 
official  relation  to  any  common  carrier  subject  to  the 
provisions  of  this  Act,  or  owning  stock  or  bonds 
thereof,  or  who  is  in  any  manner  pecuniarily  inter- 
ested therein,  shall  enter  upon  the  duties  of  or  hold 
such  office.  Said  Commissioners  shall  not  engage  in 
any  other  business,  vocation,  or  employment.  No 
vacancy  in  the  Commission  shall  impair  the  right  of 
the  remaining  Commissioners  to  exercise  all  the 
powers  of  the  Commission. 

Power  and  Duty  of  Commission  to  Inquire  Into 
Business  of  Carriers. 

Section  12.  That  the  Commission  hereby  cre- 
ated shall  have  authority  to  inquire  into  the  man- 
agement of  the  business  of  all  common  carriers  sub- 


APPENDIX  C  40S 

ject  to  the  provisions  of  this  Act,  and  shall  keep  itself 
informed  as  to  the  manner  and  method  in  which  the 
same  is  conducted,  and  shall  have  the  right  to  obtain 
from  such  common  carriers  full  and  complete  infor- 
mation necessary  to  enable  the  Commission  to  per- 
form the  duties  and  carry  out  the  objects  for  which 
it  was  created;  and  the  Commission  is  hereby  author- 
ized and  required  to  execute  and  enforce  the  pro- 
visions of  this  Act ;  and,  upon  the  request  of  the  Com- 
mission, it  shall  be  the  duty  of  any  district  attorney 
of  the  United  States  to  whom  the  Commission  may 
apply  to  institute  in  the  proper  court  and  to  prose- 
cute imder  the  direction  of  the  Attorney-General 
of  the  United  States  all  necessary  proceedings  for 
the  enforcement  of  the  provisions  of  this  Act  and  for 
the  punishment  of  all  violations  thereof,  and  the 
costs  and  expenses  of  such  prosecution  shall  be  paid 
out  of  the  appropriation  for  the  expenses  of  the 
courts  of  the  United  States ;  and  for  the  purposes  of 
this  Act  the  Commission  shall  have  power  to  require, 
by  subpoena,  the  attendance  and  testimony  of  wit- 
nesses and  the  production  of  all  books,  papers,  tariffs, 
contracts,  agreements,  and  documents  relating  to 
any  matter  under  investigation. 

Such  attendance  of  witnesses,  and  the  production 
of  such  documentary  evidence,  may  be  required  from 
any  place  in  the  United  States,  at  any  designated 
place  of  hearing.  And  in  case  of  disobedience  to  a 
subpoena  the  Commission,  or  any  party  to  a  pro- 
ceeding before  the  Commission,  may  invoke  the  aid 
of  any  court  of  the  United  States  in  requiring  the 
attendance  and  testimony  of  witnesses  and  the  pro- 


404  COMMERCIAL  LAW 

duction  of  books,  papers,  and  documents  under  the 
provisions  of  this  section. 

And  any  of  the  circuit  courts  of  the  United  States 
within  the  jurisdiction  of  which  such  inquiry  is  car- 
ried on  may,  in  case  of  contumacy  or  refusal  to  obey 
a  subpoena  issued  to  any  common  carrier  subject  to 
the  provisions  of  this  Act,  or  other  person,  issue  an 
order  requiring  such  common  carrier  or  other  per- 
son to  appear  before  said  Commission  (and  produce 
books  and  papers  if  so  ordered)  and  give  evidence 
touching  the  matter  in  question;  and  any  failure  to 
obey  such  order  of  the  court  may  be  punished  by 
such  court  as  a  contempt  thereof.  The  claim  that 
any  such  testimony  or  e\ddence  may  tend  to  crimi- 
nate the  person  giving  such  evidence  shall  not  excuse 
such  witness  from  testifying;  but  such  evidence  or 
testimony  shall  not  be  used  against  such  person  on 
the  trial  of  any  criminal  proceeding. 

The  testimony  of  any  witness  may  be  taken,  at 
the  instance  of  a  party  in  any  proceeding  or  investi- 
gation depending  before  the  Commission,  by  depo- 
sition, at  any  time  after  a  cause  or  proceeding  is  at 
issue  on  petition  and  answer.  The  Commission  may 
also  order  testimony  to  be  taken  by  deposition  in  any 
proceeding  or  investigation  pending  before  it,  at  any 
stage  of  such  proceeding  or  investigation.  Such 
deposition  may  be  taken  before  any  judge  of  any 
court  of  the  United  States,  or  any  commissioner  of 
a  circuit,  or  any  clerk  of  a  district  or  circuit  court, 
or  any  chancellor,  justice,  or  judge  of  a  supreme  or 
superior  court,  mayor  or  chief  magistrate  of  a  city, 
judge  of  a  county  court,  or  court  of  common  pleas 
of  the  United  States,  or  any  notary  public,  not  being 


APPENDIX  C  406 

of  counsel  or  attorney  to  either  of  the  parties,  nor 
interested  in  the  event  of  the  proceeding  or  investi- 
gation. Reasonable  notice  must  first  be  given  in 
writing  by  the  party  or  his  attorney  proposing  to 
take  such  deposition  to  the  opposite  party  or  his 
attorney  of  record,  as  either  may  be  nearest,  which 
notice  shall  state  the  name  of  the  witness  and  the 
time  and  place  of  the  taking  of  his  deposition.  Any 
person  may  be  compelled  to  appear  and  depose,  and 
to  produce  documentary  evidence  in  the  same  man- 
ner as  witnesses  may  be  compelled  to  appear  and 
testify  and  produce  documentary  evidence  before 
the  Commission  as  hereinbefore  provided. 

Every  person  deposing  as  herein  provided  shall 
be  cautioned  and  sworn  (or  affhin,  if  he  so  request) 
to  testify  the  whole  truth,  and  shall  be  carefully 
examined.  His  testimony  shall  be  reduced  to  writ- 
ing by  the  magistrate  taking  the  deposition,  or  under 
his  direction,  and  shall,  after  it  has  been  reduced  to 
writing,  be  subscribed  by  the  deponent. 

If  a  witness  whose  testimony  may  be  desired  to 
be  taken  by  deposition  be  in  a  foreign  country,  the 
deposition  may  be  taken  before  an  officer  or  person 
designated  by  the  Commission,  or  agreed  upon  by 
the  parties  by  stipulation  in  writing  to  be  filed  with 
the  Commission.  All  depositions  must  be  promptly 
filed  with  the  Commission. 

Witnesses  whose  depositions  are  taken  pursuant 
to  this  Act,  and  the  magistrate  or  other  officer  taking 
the  same,  shall  severally  be  entitled  to  the  same  fees 
as  are  paid  for  like  services  in  the  com'ts  of  the 
United  States. 


406  COMMEBCIAL  LAW 


Complaints  to  Commission.    How  and  by  Whom 
Made.    How  Served  Upon  Carriers. 

Section  13.  That  any  person,  firm,  corporation, 
or  association,  or  any  mercantile,  agricultural,  or 
manufacturing  society,  or  any  body  politic  or  munici- 
pal organization  complaining  of  anything  done  or 
omitted  to  be  done  by  any  common  carrier  subject 
to  the  provisions  of  this  Act  in  contravention  of  the 
provisions  thereof,  may  apply  to  said  Commission 
by  petition,  which  shall  briefly  state  the  facts ;  where- 
upon a  statement  of  the  charges  thus  made  shall  be 
forwarded  by  the  Commission  to  such  common  car- 
rier, who  shall  be  called  upon  to  satisfy  the  com- 
plaint or  to  answer  the  same  in  writing  within  a  rea- 
sonable time,  to  be  specified  by  the  Commission.  If 
such  common  carrier,  within  the  time  specified,  shall 
make  reparation  for  the  injury  alleged  to  have  been 
done,  said  carrier  shall  be  relieved  of  liability  to  the 
complainant  only  for  the  particular  violation  of  law 
thus  complained  of.  If  such  carrier  shall  not  sat- 
isfy the  complaint  within  the  time  specified,  or  there 
shall  appear  to  be  any  reasonable  ground  for  investi- 
gating said  complaint,  it  shall  be  the  duty  of  the 
Commission  to  investigate  the  matters  complained 
of  in  such  manner  and  by  such  means  as  it  shall  deem 
proper. 

Said  Commission  shall  in  like  manner  investigate 
any  complaint  forwarded  by  the  railroad  commis- 
sioner or  railroad  commission  of  any  State  or  Terri- 
tory, at  the  request  of  such  commissioner  or  com- 
mission, and  may  institute  any  inquiry  on  its  own 


APPENDIX  C  40r 

motion  in  the  same  manner  and  to  the  same  effect  as 
though  complaint  had  been  made. 

No  complaint  shall  at  any  time  be  dismissed 
because  of  the  absence  of  direct  damage  to  the 
complainant. 

Reports  and  Decisions  of  the  Commission. 

Section  14.  That  whenever  an  investigation  shall 
be  made  by  said  Commission,  it  shall  be  its  duty  to 
make  a  report  in  writing  in  respect  thereto,  which 
shall  state  the  conclusions  of  the  Commission,  to- 
gether with  its  decision,  order,  or  requirement  in  the 
premises;  and  in  case  damages  are  awarded  such 
report  shall  include  the  findings  of  fact  on  which 
the  award  is  made. 

All  reports  of  investigations  made  by  the  Com- 
mission shall  be  entered  of  record,  and  a  copy  thereof 
shall  be  furnished  to  the  party  who  may  have  com- 
plained, and  to  any  common  carrier  that  may  have 
been  complained  of. 

The  Commission  may  provide  for  the  publication 
of  its  reports  and  decisions  in  such  form  and  manner 
as  may  be  best  adapted  for  public  information  and 
use,  and  such  authorized  publications  shall  be  com- 
petent evidence  of  the  reports  and  decisions  of  the 
Commission  therein  contained  in  all  courts  of  the 
United  States  and  of  the  several  states  without  any 
further  proof  or  authentication  thereof.  The  Com- 
mission may  also  cause  to  be  printed  for  early  dis- 
tribution its  annual  reports. 


408  COMMEECIAL  LAW 

[Section  14.     That  whenever  an  investigation  shall  be 
made  by  said  Commission,  it  shall  be  its  duty  to  make  a 
report  in  writing  in  respect  thereto,  which  shall  include  the 
findings  of  fact  upon  which  the  conclusions  of  the  Commis- 
sion are  based,  together  with  its  recommendation  as  to  what 
reparation,  if  any,  should  be  made  by  the  common  carrier  to 
any  party  or  parties  who  may  be  found  to  have  been  injured ; 
and  such  findings  so  made  shall  thereafter,  in  all  judicial 
proceedings,  be  deemed  prima  facie  evidence  as  to  each  and 
every  fact  found. 
S        All  reports  of  investigations  made  by  the  Commission 
2  shall  be  entered  of  record,  and  a  copy  thereof  shall  be  fur- 
fe  nished  to  the  party  who  may  have  complained,  and  to  any 
^  common  carrier  that  may  have  been  complained  of. 

The  Commission  may  provide  for  the  publication  of  its 
reports  and  decisions  in  such  form  and  manner  as  may  be 
best  adapted  for  public  information  and  use,  and  such 
authorized  publications  shall  be  competent  evidence  of  the 
reports  and  decisions  of  the  Commission  therein  contained, 
in  all  courts  of  the  United  States,  and  of  the  several  states, 
without  any  further  proof  or  authentication  thereof.  The 
Commission  may  also  cause  to  be  printed  for  early  distribu- 
tion its  annual  reports.] 

Commission  Given  Power  to  Fix  a  Reasonable 
Maximum  Rate. 

Section  15.  That  the  Commission  is  authorized 
and  empowered,  and  it  shall  be  its  duty,  whenever, 
after  full  hearing  upon  a  complaint  made  as  provided 
in  section  thirteen  of  this  Act,  or  upon  complaint  of 
any  common  carrier,  it  shall  be  the  opinion  that  any 
of  the  rates,  or  charges  whatsoever,  demanded, 
charged,  or  collected  by  any  common  carrier  or  car- 
riers, subject  to  the  provisions  of  this  Act,  for  the 
transportation  of  persons  or  property  as  defined  in 


APPENDIX  C  409 

the  first  section  of  this  Act,  or  that  any  regeulations 
or  practices  whatsoever  of  such  carrier  or  carriers 
aifecting  such  rates  are  unjust  or  unreasonable,  or 
unjustly  discriminatory,  or  unduly  preferential  or 
prejudicial,  or  otherwise  in  violation  of  any  of  the 
provisions  of  this  Act,  to  determine  and  prescribe 
what  will  be  the  just  and  reasonable  rate  or  rates, 
charge  or  charges,  to  be  thereafter  observed  in  such 
case  as  the  maximum  to  be  charged;  and  what  regu- 
lation or  practice  in  respect  to  such  transportation 
is  just,  fair,  and  reasonable  to  be  thereafter  followed; 
and  to  make  an  order  that  the  carrier  shall  cease  and 
desist  from  such  violation,  to  the  extent  to  which  the 
Commission  shall  find  the  same  to  exist,  and  shall  not 
thereafter  publish,  demand,  or  collect  any  rate  or 
charge  for  such  transportation  in  excess  of  the  maxi- 
mum rate  or  charge  so  prescribed,  and  shall  conform 
to  the  regulation  or  practice  so  prescribed.  All  or- 
ders of  the  Commission,  except  orders  for  the  pay- 
ment of  money,  shall  take  effect  within  such  reason- 
able time,  not  less  than  thirty  days,  and  shall  con- 
tinue in  force  for  such  period  of  time,  not  exceeding 
two  years,  as  shall  be  prescribed  in  the  order  of  the 
Commission,  unless  the  same  shall  be  suspended  or 
modified  or  set  aside  by  the  Commission  or  be  sus- 
pended or  set  aside  by  a  court  of  competent  jurisdic- 
tion. Whenever  the  carrier  or  carriers,  in  obedience 
to  such  order  of  the  Commission  or  otherwise,  in  re- 
spect to  joint  rates,  fares,  or  charges,  shall  fail  to 
agree  among  themselves  upon  the  apportionment  or 
division  thereof,  the  Commission  may  after  hearing 
make  a  supplemental  order  prescribing  the  just  and 


410  COMMERCIAL  LAW 

reasonable  proportion  of  such  joint  rate  to  be  re- 
ceived by  each  carrier  party  thereto,  which  order 
shall  take  effect  as  a  part  of  the  original  order. 

The  Commission  may  also,  after  hearing  of  a  com- 
plaint, establish  through  routes  and  joint  rates  as  the 
maximum  to  be  charged  and  prescribe  the  division 
of  such  rates  as  hereinbefore  provided,  and  the  terms 
and  conditions  under  which  such  through  routes 
shall  be  operated,  when  that  may  be  necessary  to 
give  effect  to  any  provision  of  this  Act,  and  the  car- 
riers complained  of  have  refused  or  neglected  to  vol- 
imtarily  establish  such  through  routes  and  joint 
rates,  provided  no  reasonable  or  satisfactory  through 
route  exists,  and  this  provision  shall  apply  when  one 
of  the  connecting  carriers  is  a  water  line. 

If  the  owner  of  property  transported  under  this 
Act  directly  or  indirectly  renders  any  service  con- 
nected with  such  transportation,  or  furnishes  any 
instrumentality  used  therein,  the  charge  and  allow- 
ance therefor  shall  be  no  more  than  is  just  and  rea- 
sonable, and  the  Commission  may,  after  hearing  on  a 
complaint,  determine  what  is  a  reasonable  charge  as 
the  maximum  to  be  paid  by  the  carrier  or  carriers  for 
the  service  so  rendered  or  for  the  instrumentality 
so  furnished,  and  fix  the  same  by  appropriate  order, 
which  order  shall  have  the  same  force  and  effect  and 
be  enforced  in  like  manner  as  the  orders  above 
provided  for  in  this  section. 

The  foregoing  enumeration  of  powers  shall  not 
exclude  any  power  which  the  Commission  would 
otherwise  have  in  the  making  of  an  order  under  the 
provisions  of  this  Act. 


APPENDIX  C  411 

[Section  15.  That  if  in  any  case  in  which  an  investiga- 
tion shall  be  made  by  said  Commission  it  shall  be  made  to 
appear  to  the  satisfaction  of  the  Commission,  either  by  the 
testimony  of  witnesses  or  other  evidence,  that  anything  has 
been  done  or  omitted  to  be  done  in  violation  of  the  provi- 
sions of  this  Act,  or  of  any  law  cognizable  by  said  Commis- 
sion, by  any  common  carrier,  or  that  any  injury  or  damage 
has  been  sustained  by  the  party  or  parties  complaining,  or 
by  other  parties  aggrieved  in  consequence  of  any  such  viola- 
tion, it  shall  be  the  duty  of  the  Commission  to  forthwith 
§  cause  a  copy  of  its  report  in  respect  thereto  to  be  delivered 
^  to  such  common  carrier,  together  with  a  notice  to  said  com- 
p3  mon  carrier  to  cease  and  desist  from  such  violation,  or  to 
^  make  reparation  for  the  injury  so  found  to  have  been  done, 
or  both,  within  a  reasonable  time,  to  be  specified  by  the 
Commission;  and  if,  within  the  time  specified,  it  shall  be 
made  to  appear  to  the  Commission  that  such  common  car- 
rier has  ceased  from  such  violation  of  law,  and  has  made 
reparation  for  the  injury  found  to  have  been  done,  in  com- 
pliance with  the  report  and  notice  of  the  Commission,  or  to 
the  satisfaction  of  the  party  complaining,  a  statement  to  that 
effect  shall  be  entered  of  record  by  the  Commission,  and  the 
said  common  carrier  shall  thereupon  be  relieved  from  further 
liability  or  penalty  for  such  particular  violation  of  law.] 


Commission  May  Award  Damages. 

Section  16.  That  if,  after  hearing  on  a  complaint 
made  as  provided  in  section  thirteen  of  this  Act,  the 
Commission  shall  determine  that  any  party  com- 
plainant is  entitled  to  an  award  of  damages  under 
the  provisions  of  this  Act  for  a  violation  thereof,  the 
Commission  shall  make  an  order  directing  the  car- 
rier to  pay  to  the  complainant  the  sum  to  which  he  is 
entitled  on  or  before  a  day  named. 

If  a  carrier  does  not  comply  with  an  order  for  the 


412  COMMERCIAL  LAW 

payment  of  money  within  the  time  limit  in  such  or- 
der, the  complainant,  or  any  person  for  whose  benefit 
such  order  was  made,  may  file  in  the  circuit  court  of 
the  United  States  for  the  district  in  which  he  resides 
or  in  which  is  located  the  principal  operating  office 
of  the  carrier,  or  through  which  the  road  of  the  car- 
rier runs,  a  petition  setting  forth  briefly  the  causes 
for  which  he  claims  damages,  and  the  order  of  the 
Commission  in  the  premises.  Such  suit  shall  pro- 
ceed in  all  respects  like  other  civil  suits  for  damages, 
except  that  on  the  trial  of  such  suit  the  findings  and 
order  of  the  Commission  shall  be  prima  facie  evi- 
dence of  the  facts  therein  stated,  and  except  that  the 
petitioner  shall  not  be  liable  for  costs  in  the  circuit 
court  nor  for  costs  at  any  subsequent  stage  of  the 
proceedings  unless  they  accrue  upon  his  appeal.  If 
the  petitioner  shall  finally  prevail  he  shall  be  allowed 
a  reasonable  attorney's  fee,  to  be  taxed  and  collected 
as  a  part  of  the  costs  of  the  suit.  All  complaints  for 
the  recovery  of  damages  shall  be  filed  with  the  Com- 
mission within  two  years  from  the  time  the  cause  of 
action  accrues,  and  not  after,  and  a  petition  for  the 
enforcement  of  an  order  for  the  payment  of  money 
shall  be  filed  in  the  circuit  court  within  one  year  from 
the  date  of  the  order,  and  not  after:  Provided,  That 
claims  accrued  prior  to  the  passage  of  this  Act  may 
be  presented  within  one  year. 

In  such  suits  all  parties  in  whose  favor  the  Com- 
mission may  have  made  an  award  for  damages  by  a 
single  order  may  be  joined  as  plaintiffs,  and  all  of 
the  carriers  parties  to  such  order  awarding  such 
damages  may  be  joined  as  defendants,  and  such  suit 
may  be  maintained  by  such  joint  plaintiffs  and 


APPENDIX  C  413 

against  such  joint  defendants  in  any  district  where 
any  one  of  such  joint  plaintiffs  could  maintain  such 
suit  against  any  one  of  such  joint  defendants;  and 
service  of  process  against  any  one  of  such  defendants 
as  may  not  be  found  in  the  district  where  the  suit  is 
brought  may  be  made  in  any  district  where  such  de- 
fendant carrier  has  its  principal  operating  office.  In 
case  of  such  joint  suit  the  recovery,  if  any,  may  be 
by  judgment  in  favor  of  any  one  of  such  plaintiffs, 
against  the  defendant  found  to  be  liable  to  such 
plaintiff. 

Every  order  of  the  Commission  shall  be  forthwith 
served  by  mailing  to  any  one  of  the  principal  officers 
or  agents  of  the  carrier  at  his  usual  place  of  business 
a  copy  thereof;  and  the  registry  mail  receipt  shall 
be  prima  facie  evidence  of  the  receipt  of  such  order 
by  the  carrier  in  due  course  of  mail. 

The  Commission  shall  be  authorized  to  suspend 
or  modify  its  orders  upon  such  notice  and  in  such 
manner  as  it  shall  deem  proper. 

It  shall  be  the  duty  of  every  common  carrier,  its 
agents  and  employees,  to  observe  and  comply  with 
such  orders  so  long  as  the  same  shall  remain  in  effect. 

Any  carrier,  any  officer,  representative,  or  agent 
of  a  carrier,  or  any  receiver,  trustee,  lessee,  or  agent 
of  either  of  them,  who  knowingly  fails  or  neglects  to 
obey  any  order  made  under  the  provisions  of  section 
fifteen  of  this  Act,  shall  forfeit  to  the  United  States 
the  sum  of  five  thousand  dollars  for  each  offense. 
Every  distinct  violation  shall  be  a  separate  offense, 
and  in  case  of  a  continuing  violation  each  day  shall 
be  deemed  a  separate  offense. 

The  forfeiture  provided  for  in  this  Act  shall  be 


414  COMMERCIAL  LAW 

pajrable  into  the  Treasury  of  the  United  States,  and 
shall  be  recoverable  in  a  civil  suit  in  the  name  of  the 
United  States,  brought  in  the  district  where  the  car- 
rier has  its  principal  operating  office,  or  in  any  dis- 
trict through  which  the  road  of  the  carrier  runs. 

It  shall  be  the  duty  of  the  various  district  attor- 
neys, under  the  direction  of  the  Attorney- General  of 
the  United  States,  to  prosecute  for  the  recovery  of 
forfeitures.  The  costs  and  expenses  of  such  prose- 
cution shall  be  paid  out  of  the  appropriation  for  the 
expenses  of  the  courts  of  the  United  States.  The 
Commission  may,  with  the  consent  of  the  Attorney- 
General,  employ  special  counsel  in  any  proceeding 
under  this  Act,  paying  the  expenses  of  such  employ- 
ment out  of  its  own  appropriation. 

If  any  carrier  fails  or  neglects  to  obey  any  order 
of  the  Commission,  other  than  for  the  payment  of 
money,  while  the  same  is  in  effect,  any  party  injured 
thereby,  or  the  Commission  in  its  own  name,  may 
apply  to  the  circuit  court  in  the  district  where  such 
carrier  has  its  principal  operating  office,  or  in  which 
the  violation  or  disobedience  of  such  order  shall  hap- 
pen, for  an  enforcement  of  such  order.  Such  applica- 
tion shall  be  by  petition,  which  shall  state  the  sub- 
stance of  the  order  and  the  respect  in  which  the 
carrier  has  failed  of  obedience,  and  shall  be  served 
upon  the  carrier  in  such  manner  as  the  court  may 
direct,  and  the  court  shall  prosecute  such  inquiries 
and  make  such  investigations,  through  such  means 
as  it  shall  deem  needful  in  the  ascertainment  of  the 
facts  at  issue  or  which  may  arise  upon  the  hearing 
of  such  petition.  If,  upon  such  hearing  as  the  court 
may  determine  to  be  necessary,  it  appears  that  the 


APPENDIX  0  415 

order  was  regularly  made  and  duly  served,  and  that 
the  carrier  is  in  disobedience  of  the  same,  the  court 
shall  enforce  obedience  to  such  order  by  a  writ  of 
injunction,  or  other  proper  process,  mandatory  or 
otherwise,  to  restrain  such  carrier,  its  oflBcers,  agents, 
or  representatives,  from  further  disobedience  of  such 
order,  or  to  enjoin  upon  it,  or  them,  obedience  to  the 
same;  and  in  the  enforcement  of  such  process  the 
court  shall  have  those  powers  ordinarily  exercised  by 
it  in  compelling  obedience  to  its  writs  of  injunction 
and  mandamus. 

From  any  action  upon  such  petition  an  appeal 
shall  lie  by  either  party  to  the  Supreme  Court  of  the 
United  States,  and  in  such  court  the  case  shall  have 
priority  in  hearing  and  determination  over  all  other 
causes  except  criminal  causes,  but  such  appeal  shall 
not  vacate  or  suspend  the  order  appealed  from. 

The  venue  of  suits  brought  in  any  of  the  circuit 
courts  of  the  United  States  against  the  Commission 
to  enjoin,  set  aside,  annul,  or  suspend  any  order  or 
requirement  of  the  Commission  shall  be  in  the  dis- 
trict where  the  carrier  against  whom  such  order  or 
requirement  may  have  been  made  has  its  principal 
operating  office,  and  may  be  brought  at  any  time 
after  such  order  is  promulgated.  And  if  the  order  or 
requirement  has  been  made  against  two  or  more  car- 
riers then  in  the  district  where  any  one  of  said  car- 
riers has  its  principal  operating  office,  and  if  the  car- 
rier has  its  principal  operating  office  in  the  District 
of  Columbia  then  the  venue  shall  be  in  the  district 
where  said  carrier  has  its  principal  office;  and  juris- 
diction to  hear  and  determine  such  suits  is  hereby 
vested  in  such  courts.   The  provisions  of  ''An  Act  to 


416  COMMERCIAL  LATf 

expedite  the  hearing  and  determination  of  suits  in 
equity,  and  so  forth,"  approved  February  eleventh, 
nineteen  hundred  and  three,  shall  be,  and  are  hereby, 
made  applicable  to  all  such  suits,  including  the  hear- 
ing on  an  application  for  a  preliminary  injunction, 
and  are  also  made  applicable  to  any  proceeding  in 
equity  to  enforce  any  order  or  requirement  of  the 
Commission,  or  any  of  the  provisions  of  the  Act 
to  regulate  commerce  approved  February  fourth, 
eighteen  hundred  and  eighty-seven,  and  all  Acts 
amendatory  thereof  or  supplemental  thereto.  It 
shall  be  the  duty  of  the  Attorney- General  in  every 
such  case  to  file  the  certificate  provided  for  in  said 
expediting  Act  of  February  eleventh,  nineteen  hun- 
dred and  three,  as  necessary  to  the  application  of  the 
provisions  thereof,  and  upon  appeal  as  therein  au- 
thorized to  the  Supreme  Court  of  the  United  States, 
the  case  shall  have  in  such  court  priority  in  hearing 
and  determination  over  all  other  causes  except  crimi- 
nal causes:  Provided,  That  no  injunction,  interloc- 
utory order  or  decree  suspending  or  restraining  the 
enforcement  of  an  order  of  the  Commission  shall  be 
granted  except  on  hearing  after  not  less  than  five 
days'  notice  to  the  Commission.  An  appeal  may  be 
taken  from  any  interlocutory  order  or  decree  grant- 
ing or  continuing  an  injunction  in  any  suit,  but  shall 
lie  only  to  the  Supreme  Court  of  the  United  States: 
Provided  further,  That  the  appeal  must  be  taken 
within  thirty  days  from  the  entry  of  such  order  or 
decree  and  it  shall  take  precedence  in  the  appellate 
court  over  all  other  causes,  except  causes  of  like 
character  and  criminal  causes. 

The  copies  of  schedules  and  tariffs  of  rates,  fares. 


4LPPBN15IX  0  417 

and  charges,  and  of  all  contracts,  agreements,  or 
arrangements  between  common  carriers  filed  with 
the  Commission  as  herein  provided,  and  the  statistics, 
tables,  and  figures  contained  in  the  annual  reports  of 
carriers  made  to  the  Commission,  as  required  by  the 
provisions  of  this  Act,  shall  be  preserved  as  public 
records  in  the  custody  of  the  secretary  of  the  Com- 
mission, and  shall  be  received  as  prima  facie  evidence 
of  what  they  purport  to  be  for  the  purpose  of  investi- 
gations by  the  Commission  and  in  all  judicial  pro- 
ceedings; and  copies  of  or  extracts  from  any  of  said 
schedules,  tariffs,  contracts,  agreements,  arrange- 
ments, or  reports  made  public  records  as  aforesaid, 
certified  by  the  secretary  under  its  seal,  shall  be 
received  in  evidence  with  like  effect  as  the  originals. 

Rehearings  by  the  Commission. 

Section  16a.  That  after  a  decision,  order,  or  re- 
quirement has  been  made  by  the  Commission  in  any 
proceeding  any  party  thereto  may  at  any  time  make 
application  for  rehearing  of  the  same,  or  any  matter 
determined  therein,  and  it  shall  be  lawful  for  the 
Commission  in  its  discretion  to  grant  such  a  rehear- 
ing if  sufficient  reason  therefor  be  made  to  appear. 
Applications  for  rehearing  shall  be  governed  by  such 
general  rules  as  the  Commission  may  establish.  No 
such  application  shall  excuse  any  carrier  from  com- 
pljring  with  or  obeying  any  decision,  order,  or 
requirement  of  the  Commission,  or  operate  in  any 
manner  to  stay  or  postpone  the  enforcement  thereof, 
without  the  special  order  of  the  Commission.  In  case 
a  rehearing  is  granted  the  proceedings  thereupon 


418  COMMERCIAL  LAW 

shall  conform  as  nearly  as  may  be  to  the  proceedings 
in  an  original  hearing,  except  as  the  Commission 
may  otherwise  direct;  and  if,  in  its  judgment,  after 
such  rehearing  and  the  consideration  of  all  facts, 
including  those  arising  since  the  former  hearing,  it 
shall  appear  that  the  original  decision,  order,  or  re- 
quirement is  in  any  respect  unjust  or  unwarranted, 
the  Commission  may  reverse,  change,  or  modify  the 
same  accordingly.  Any  decision,  order,  or  require- 
ment made  after  such  rehearing,  reversing,  changing, 
or  modifying  the  original  determination  shall  be  sub- 
ject to  the  same  provisions  as  an  original  order. 

[Section  16.  That  whenever  any  common  carrier,  as 
defined  in  and  subject  to  the  provisions  of  this  Act,  shall 
violate  or  refuse  or  neglect  to  obey  or  perform  any  lawful 
order  or  requirement  of  the  Commission  created  by  this  Act, 
not  founded  upon  a  controversy  requiring  a  trial  by  jury,  as 
provided  by  the  seventh  amendment  to  the  Constitution  of 
the  United  States,  it  shall  be  lawful  for  the  Commission  or 
for  any  company  or  person  interested  in  such  order  or 
requirement,  to  apply  in  a  summary  way,  by  petition,  to  the 
H  circuit  court  of  the  United  States  sitting  in  equity  in  the 
^  judicial  district  in  which  the  common  carrier  .oraplained  of 
PLi  has  its  principal  office,  or  in  which  the  violation  or  dis- 
p;  obedience  of  such  order  or  requirement  shall  happen,  alleg- 
ing such  violation  or  disobedience,  as  the  case  may  be ;  and 
the  said  court  shall  have  power  to  hear  and  determine  the 
matter  on  such  short  notice  to  the  common  carrier  com- 
plained of  as  the  court  shall  deem  reasonable;  and  such 
notice  may  be  served  on  such  common  carrier,  his  or  its 
officers,  agents,  or  servants  in  such  manner  as  the  court  shall 
direct;  and  said  court  shall  proceed  to  hear  and  determine 
the  matter  speedily  as  a  court  of  equity,  and  without  the 
formal  pleadings  and  proceedings  applicable  to  ordinary 
suits  in  equity,  but  in  such  manner  as  to  do  justice  in  the 


APPENDIX  0  419 

premises ;  and  to  this  end  such  court  shall  have  power,  if  it 
think  fit,  to  direct  and  prosecute  in  such  mode  and  by  such 
persons  as  it  may  appoint,  all  such  inquiries  as  the  court  may 
think  needful  to  enable  it  to  form  a  just  judgment  in  the 
matter  of  such  petition ;  and  on  such  hearing  the  findings  of 
fact  in  the  report  of  said  Commission  shall  be  prima  facie 
evidence  of  the  matters  therein  stated ;  and  if  it  be  made  to 
appear  to  such  court,  on  such  hearing  or  on  report  of  any 
such  person  or  persons,  that  the  lawful  order  or  requirement 
of  said  Commission  drawn  in  question  has  been  violated  or 
disobeyed,  it  shall  be  lawful  for  such  court  to  issue  a  writ 
of  injunction  or  other  proper  process,  mandatory  or  other- 
wise,  to  restrain  such  common  carrier  from  further  continu- 
ing such  violation  or  dLsobedience  of  such  order  or  require- 
ment of  said  Commission,  and  enjoining  obedience  to  the 
same;  and  in  case  of  any  disobedience  of  any  such  writ  of 
injunction  or  other  proper  process,  mandatory  or  otherwise, 
it  shall  be  lawful  for  such  court  to  issue  writs  of  attachment, 
^  or  any  other  process  of  said  court  incident  or  applicable  to 
^  writs  of  injunction  or  other  proper  process,  mandatory  or 
^  otherwise,  against  such  common  carrier,  and  if  a  corpora- 
tion, against  one  or  more  of  the  directors,  officers,  or  agents 
of  the  same,  or  against  any  owner,  lessee,  trustee,  receiver, 
or  other  person  failing  to  obey  such  writ  of  injunction,  or 
other  process,  mandatory  or  otherwise ;  and  said  court  may, 
if  it  shall  think  fit,  make  an  order  directing  such  common 
carrier  or  other  person  so  disobeying  such  writ  of  injunction 
or  other  proper  process,  mandatory  or  otherwise,  to  pay  such 
sum  of  money,  not  exceeding  for  each  carrier  or  person  in 
default  the  sum  of  five  hundred  dollars  for  every  day,  after 
a  day  to  be  named  in  the  ordor,  that  such  carrier  or  other 
person  shall  fail  to  obey  such  injunction  or  other  proper 
process,  mandatory  or  otherwise;  and  such  moneys  shall  be 
payable  as  the  court  shall  direct,  either  to  the  party  com- 
plaining or  into  court,  to  abide  the  ultimate  decision  of  the 
court,  or  into  th©  Treasury;  and  payment  thereof  may,  with- 
out prejudice  to  any  other  mode  of  recovering  the  same,  be 
enforced  by  attachment  or  order  in  the  nature  of  a  writ  of 


n 


Pi 


420  COMMERCIAL  LAW 

execution,  in  like  manner  as  if  the  same  had  been  recovered 
by  a  final  decree  in  personam  in  such  court.  When  the  sub- 
ject in  dispute  shall  be  of  the  value  of  two  thousand  dollars 
or  more,  either  party  to  such  proceeding  before  said  court 
may  appeal  to  the  Supreme  Court  of  the  United  States, 
under  the  same  regulations  now  provided  by  law  in  respect 
of  security  for  such  appeal ;  but  such  appeal  shall  not  oper- 
ate to  stay  or  supersede  the  order  of  the  court  or  the  execu- 
tion of  any  writ  or  process  thereon ;  and  such  court  may,  in 
every  such  matter,  order  the  payment  of  such  costs  and 
counsel  fees  as  shall  be  deemed  reasonable.  Whenever  any 
such  petition  shall  be  filed  or  presented  to  the  Commission 
it  shall  be  the  duty  of  the  district  attorney,  under  the  direc- 
tion of  the  Attorney-General  of  the  United  States,  to  prose- 
cute the  same ;  and  the  costs  and  expenses  of  such  prosecu- 
tion shall  be  paid  out  of  the  appropriation  for  the  expenses 
of  the  courts  of  the  United  States. 
Q  If  the  matters  involved  in  any  such  order  or  requirement 
S  of  said  Commission  are  founded  upon  a  controversy  requir- 
^  ing  a  trial  by  jury,  as  provided  by  the  seventh  amendment 
u  to  the  Constitution  of  the  United  States,  and  any  such  com- 
mon carrier  shall  violate  or  refuse  or  neglect  to  obey  or  per- 
form the  same,  after  notice  given  by  said  Commission  as 
provided  in  the  fifteenth  section  of  this  Act,  it  shall  be  law- 
ful for  any  company  or  person  interested  in  such  order  or 
requirement  to  apply  in  a  summary  way  by  petition  to  the 
circuit  court  of  the  United  States  sitting  as  a  court  of  law  in 
the  judicial  district  in  which  the  carrier  complained  of  has 
its  principal  office,  or  in  which  the  violation  or  disobedience 
of  such  order  or  requirement  shall  happen,  alleging  such 
violation  or  disobedience  as  the  case  may  be ;  and  said  court 
shall  by  its  order  then  fix  a  time  and  place  for  the  trial  of 
said  cause,  which  shall  not  be  less  than  twenty  nor  more 
than  forty  days  from  the  time  said  order  is  made,  and  it 
shall  be  the  duty  of  the  marshal  of  the  district  in  which  said 
proceeding  is  pending  to  forthwith  serve  a  copy  of  said  peti- 
tion, and  of  said  order,  upon  each  of  the  defendants,  and  it 
shall  be  the  duty  of  the  defendants  to  file  their  answers  to 


APPENDIX  C  421 

said  petition  within  ten  days  after  the  service  of  the  same 
upon  them  as  aforesaid.  At  the  trial  the  findings  of  fact  of 
said  Commission  as  set  forth  in  its  report  shall  be  prima 
facie  evidence  of  the  matters  therein  stated,  and  if  either 
party  shall  demand  a  jury  or  shall  omit  to  waive  a  jury  the 
court  shall,  by  its  order,  direct  the  marshal  forthwith  to 
summon  a  jury  to  try  the  cause ;  but  if  all  the  parties  shall 
waive  a  jury  in  writing,  then  the  court  shall  try  the  issues 
in  said  cause  and  render  its  judgment  thereon.  If  the  sub- 
W  ject  in  dispute  shall  be  of  the  value  of  two  thousand  dollars 
^  or  more  either  party  may  appeal  to  the  Supreme  Court  of 
^  the  United  States  under  the  same  regulations  now  provided 
«  by  law  in  respect  to  security  for  such  appeal;  but  such 
appeal  must  be  taken  within  twenty  days  from  the  day  of 
the  rendition  of  the  judgment  of  said  circuit  court.  If  the 
judgment  of  the  circuit  court  shall  be  in  favor  of  the  party 
complaining  he  or  they  shall  be  entitled  to  recover  reason- 
able counsel  or  attorney's  fee,  to  be  fixed  by  the  court,  which 
shall  be  collected  as  part  of  the  costs  in  the  case.  For  the 
purposes  of  this  Act,  excepting  its  penal  provisions,  the  cir- 
cuit courts  of  the  United  States  shall  be  deemed  to  be  always 
in  session.] 

Interstate  Commerce  Commission.    Form  of 
Procedure. 

Section  17.  That  the  Commission  may  conduct 
its  proceedings  in  such  manner  as  will  best  conduce 
to  the  proper  dispatch  of  business  and  to  the  ends  of 
justice.  A  majority  of  the  Commission  shall  consti- 
tute a  quorum  for  the  transaction  of  business,  but 
no  commissioner  shall  participate  in  any  hearing  or 
proceeding  in  which  he  has  any  pecuniary  interest. 
Said  Commission  may,  from  time  to  time,  make  or 
amend  such  general  rules  or  orders  as  may  be  requi- 
site for  the  order  and  regulations  of  proceedings  be- 


42»  COMMERCIAL  LAW 

fore  it,  including  forms  of  notices  and  the  service 
thereof,  which  shall  conform,  as  nearly  as  may  be, 
to  those  in  use  in  the  courts  of  the  United  States. 
Any  party  may  appear  before  said  Commission  and 
be  heard,  in  person  or  by  attorney.  Every  vote  and 
official  act  of  the  Commission  shall  be  entered  of 
record,  and  its  proceedings  shall  be  public  upon  the 
request  of  either  party  interested.  Said  Commis- 
sion shall  have  an  official  seal,  which  shall  be  judi- 
cially noticed.  Either  of  the  members  of  the  Com- 
mission may  administer  oaths  and  affirmations  and 
sign  subpoenas. 

Former  Salary  of  Commissioners. 

Section  18.  That  each  Commissioner  shall  re- 
ceive an  annual  salary  of  seven  thousand  five  hun- 
dred dollars,  payable  in  the  same  manner  as  the 
judges  of  the  courts  of  the  United  States.  The  Com- 
mission shall  appoint  a  secretary,  who  shall  receive 
an  annual  salary  of  three  thousand  five  hundred  dol- 
lars, payable  in  like  manner.  The  Commission 
shall  have  authority  to  employ  and  fix  the  compen- 
sation of  such  other  employees  as  it  may  find  neces- 
sary to  proper  performance  of  its  duties.  Until 
otherwise  provided  by  law,  the  Commission  may  hire 
suitable  offices  for  its  use  and  shall  have  authority  to 
procure  all  necessary  office  supplies.  Witnesses 
summoned  before  the  Commission  shall  be  paid  the 
same  fees  and  mileage  that  are  paid  witnesses  in  the 
courts  of  the  United  States. 

All  of  the  expenses  of  the  Commission,  including 
all  necessary  expenses  for  transportation  incurred 


APPE>^DIX  C  423 

by  the  Commissioners,  or  by  their  employees  under 
their  orders,  in  making  any  investigations  or  upon 
official  business  in  any  other  places  than  in  the  city 
of  Washington,  shall  be  allowed  and  paid  on  the 
presentation  of  itemized  vouchers  therefor  approved 
by  the  chairman  of  the  Commission. 

Sessions  of  the  Commission. 

Section  19.  That  the  principal  office  of  the  Com- 
mission shall  be  in  the  city  of  Washington,  where  its 
general  sessions  shall  be  held;  but  whenever  the  con- 
venience of  the  public  or  the  parties  may  be  pro- 
moted or  delay  or  expenses  prevented  thereby,  the 
Commission  may  hold  special  sessions  in  any  part  of 
the  United  States.  It  may,  by  one  or  more  of  the 
Commissioners,  prosecute  any  inquiry  necessary  to 
its  duties,  in  any  part  of  the  United  States,  into  any 
matter  or  question  of  fact  pertaining  to  the  business 
of  any  common  carrier  subject  to  the  provisions  of 
this  Act. 
Commission  Authorized  to  Require  Annual  Reports. 

Section  20.  That  the  Commission  is  hereby  au- 
thorized to  require  annual  reports  from  all  common 
carriers  subject  to  the  provisions  of  this  Act,  and 
from  the  owners  of  all  railroads  engaged  in  inter- 
state commerce  as  defined  in  this  Act,  to  prescribe 
the  manner  in  which  such  reports  shall  be  made,  and 
to  require  from  such  carriers  specific  answers  to  all 
questions  upon  which  the  Commission  may  need  in- 
formation. Such  annual  reports  shall  show  in  detail 
the  amount  of  capital  stock  issued,  the  amounts  paid 
therefor,  and  the  manner  of  payment  for  the  same; 


424  COMMERCIAL  LAW 

the  dividends  paid,  the  surplus  fund,  if  any,  and  the 
number  of  stockholders;  the  funded  and  floating 
debts  and  the  interest  paid  thereon;  the  cost  and 
value  of  carrier^s  property,  franchises,  and  equip- 
ments; the  number  of  employees  and  the  salariee 
paid  each  class;  the  accidents  to  passengers,  em- 
ployees, and  other  persons,  and  the  causes  thereof; 
the  amounts  expended  for  improvements  each  year, 
how  expended,  and  the  character  of  such  improve- 
ments; the  earnings  and  receiepts  from  each  branch 
of  business  and  from  all  sources;  the  operating  and 
other  expenses;  the  balances  of  profit  and  loss;  and  a 
complete  exhibit  of  financial  operations  of  the  car- 
rier each  year,  including  an  annual  balance  sheet. 
Such  reports  shall  also  contain  such  information  in 
relation  to  rates  or  regulations  concerning  fares  or 
freights,  or  agreements,  arrangements,  or  contracts 
affecting  the  same  as  the  Commission  may  require; 
and  the  Commission  may,  in  its  discretion,  for  the 
purpose  of  enabling  it  the  better  to  carry  out  the  pur- 
poses of  this  Act,  prescribe  a  period  of  time  within 
which  all  common  carriers  subject  to  the  provisions 
of  this  Act  shall  have,  as  near  as  may  be,  a  uniform 
system  of  accounts,  and  the  manner  in  which  such 
accounts  shall  be  kept. 

Said  detailed  reports  shall  contain  all  the  required 
statistics  for  the  period  of  twelve  months  ending  on 
the  thirtieth  day  of  June  in  each  year,  and  shall  be 
made  out  under  oath  and  filed  with  the  Commission, 
at  its  office  in  Washington,  on  or  before  the  thirtieth 
day  of  September  then  next  following,  unless  addi- 
tional time  be  granted  in  any  case  by  the  Commis- 
sion; and  if  any  carrier,  person,  or  corporation  sub- 


APPENDIX  0  485 

Ject  to  the  provisions  of  this  Act  shall  fail  to  make 
and  file  said  annual  reports  within  the  time  above 
specified,  or  within  the  time  extended  by  the  Com- 
mission for  making  and  filing  the  same,  or  shall  fail 
to  make  specific  answer  to  any  question  authorized 
by  the  provision  of  this  section  within  thirty  days 
from  the  time  it  is  lawfully  required  so  to  do,  such 
parties  shall  forfeit  to  the  United  States  the  sum  of 
one  hundred  dollars  for  each  and  every  day  it  shall 
continue  to  be  in  default  with  respect  thereof.  The 
Commission  shall  also  have  authority  to  require  said 
carriers  to  file  monthly  reports  of  earnings  and  ex- 
penses or  special  reports  within  a  specified  period, 
and  if  any  such  carrier  shall  fail  to  file  such  reports 
within  the  time  fixed  by  the  Commission  it  shall  be 
subject  to  the  forfeitures  last  above  provided. 

Said  forfeitures  shall  be  recovered  in  the  manner 
provided  for  the  recovery  of  forfeitures  under  the 
provisions  of  this  Act. 

The  oath  required  by  this  section  may  T)e  taken 
before  any  person  authorized  to  administer  an  oath 
by  the  laws  of  the  State  in  which  the  same  is  taken. 

The  Commission  may,  in  its  discretion,  prescribe 
the  forms  of  any  and  all  accounts,  records  and  memo- 
randa to  be  kept  by  carriers  subject  to  the  provisions 
of  this  Act,  including  the  accounts,  records,  and 
memoranda  of  the  movement  of  traffic  as  well  as  the 
receipts  and  expenditures  of  moneys.  The  Commis- 
sion shall  at  all  times  have  access  to  all  accounts, 
records,  and  memoranda  kept  by  carriers  subject  to 
this  Act,  and  it  shall  be  imlawful  for  such  carriers 
to  keep  any  other  accounts,  records,  or  memoranda 
than  those  prescribed  or  approved  by  the  Commis- 


426  COMMERCIAL  LAW 

sion,  and  it  may  employ  special  agents  or  examiners, 
who  shall  have  authority  under  the  order  of  the  Com- 
mission to  inspect  and  examine  any  and  all  accounts, 
records,  and  memoranda  kept  by  such  carriers.  This 
provision  shall  apply  to  receivers  of  carriers  and 
operating  trustees. 

In  case  of  failure  or  refusal  on  the  part  of  any 
such  carrier,  receiver,  or  trustee  to  keep  such  ac- 
counts, records,  and  memoranda  on  the  books  and 
in  the  manner  prescribed  by  the  Commission,  or  to 
submit  such  accoimts,  records,  and  memoranda  as  are 
kept  to  the  inspection  of  the  Commission  or  any  of 
its  authorized  agents  or  examiners,  such  carrier,  re- 
ceiver, or  trustee  shall  forfeit  to  the  United  States 
the  sum  of  five  hundred  dollars  for  each  and  every 
day  of  the  continuance  of  such  offense,  such  forfeit- 
ures to  be  recoverable  in  the  same  manner  as  other 
forfeitures  provided  for  in  this  Act. 

Any  person  who  shall  wilfully  make  any  false 
entry  in  the  accounts  of  any  book  of  accounts  or  in 
any  record  or  memoranda  kept  by  a  carrier,  or  who 
shall  wilfully  destroy,  mutilate,  alter,  or  by  any  other 
means  or  device  falsify  the  record  of  any  such  ac- 
count, record,  or  memoranda,  or  who  shall  wilfully 
neglect  or  fail  to  make  full,  true,  and  correct  entries 
in  such  accounts,  records,  or  memoranda  of  all  facts 
and  transactions  appertaining  to  the  carrier's  busi- 
ness, or  shall  keep  any  other  accounts,  records,  or 
memoranda  than  those  prescribed  or  approved  by 
the  Conmiission,  shall  be  deemed  guilty  of  a  misde- 
meanor and  shall  be  subject,  upon  conviction  in  any 
court  of  the  United  States  of  competent  jurisdiction, 
to  a  fine  of  not  less  than  one  thousand  dollars  nor 


APPENDIX  C  427 

more  than  five  thousand  dollars,  or  imprisonment  for 
a  term  not  less  than  one  year  nor  more  than  three 
years,  or  both  such  fine  and  imprisonment. 

Any  examiner  who  divulges  any  fact  or  informa- 
tion which  may  come  to  his  knowledge  during  the 
course  of  such  examination,  except  in  so  far  as  he 
may  be  directed  by  the  Commission  or  by  a  court  or 
judge  thereof,  shall  be  subject,  upon  conviction  in 
any  court  of  the  United  States  of  competent  jurisdic- 
tion, to  a  fine  of  not  more  than  five  thousand  dollars 
or  imprisonment  for  a  term  not  exceeding  two  years, 
or  both. 

That  the  circuit  and  district  courts  of  the  United 
States  shall  have  jurisdiction,  upon  the  application 
of  the  Attorney- General  of  the  United  States  at  the 
request  of  the  Commission,  alleging  a  failure  to  com- 
ply with  or  a  violation  of  any  of  the  provisions  of 
said  Act  to  regulate  commerce  or  of  any  Act  supple- 
mentary thereto  or  amendatory  thereof  by  any  com- 
mon carrier,  to  issue  a  writ  or  writs  of  mandamus 
commanding  such  common  carrier  to  comply  with 
the  provisions  of  said  Acts,  or  any  of  them. 

And  to  carry  out  and  give  effect  to  the  provisions 
of  said  Acts,  or  any  of  them,  the  Commission  is 
hereby  authorized  to  employ  special  agents  or  ex- 
aminers who  shall  have  power  to  administer  oaths, 
examine  witnesses,  and  receive  evidence. 

That  any  common  carrier,  railroad,  or  transpor- 
tation company  receiving  property  for  transporta- 
tion from  a  point  in  one  State  to  a  point  in  another 
State  shall  issue  a  receipt  or  bill  of  lading  therefor 
and  shall  be  liable  to  the  lawful  holder  thereof  for 
any  loss,  damage,  or  injury  to  such  property  caused 


428  COMMERCIAL  LAW 

by  it  or  by  any  common  carrier,  railroad,  or  transpor- 
tation company  to  which  such  property  may  be  de- 
livered or  over  whose  line  or  lines  such  property  may 
pass,  and  no  contracts,  receipts,  rule,  or  regidation 
shall  exempt  such  common  carrier,  railroad,  or  trans- 
portation company  from  the  liability  hereby  imposed: 
Provided,  That  nothing  in  this  section  shall  deprive 
any  holder  of  such  receipt  or  bill  of  lading  of  any 
remedy  or  right  of  action  which  he  has  under  existing 
law. 

That  the  common  carrier,  railroad,  or  transporta- 
tion company  issuing  such  receipt  or  bill  of  lading 
shall  be  entitled  to  recover  from  the  common  carrier, 
railroad,  or  transportation  company  on  whose  line  the 
loss,  damage,  or  injury  shall  have  been  sustained  the 
amount  of  such  loss,  damage,  or  injury  as  it  may  be 
required  to  pay  to  the  owners  of  such  property,  as 
may  be  evidenced  by  any  receipt,  judgment,  or 
transcript  thereof. 

[Section  20.     That  the  Commission  is  hereby  authorized 

to  require  annual  reports  from  all  common  carriers  subject 

to  the  provisions  of  this  Act,  to  fix  the  time  and  prescribe 

the  manner  in  which  such  reports  shall  be  made,  and  to 

require  from  such  carriers  specific  answers  to  all  questions 

p  upon  which  the  Commission  may  need  information.     Such 

3  annual  reports  shall  show  in  detail  the  amount  of  capital 

rt  stock  issued,  the  amounts  paid  therefor,  and  the  manner  of 

g  payment  for  the  same ;  the  dividends  paid ;  the  surplus  fund, 

if  any,  and  the  number  of  stockholders;  the  funded  and 

floating  debts  and  the  interest  paid  thereon;  the  cost  and 

value  of  the  carrier's  property,  franchises,  and  equipments; 

the  number  of  employees  and  the  salary  paid  each  class ;  the 

amounts  expended  for  improvements  each  ^ear,  how  ex- 


n 


APPENDIX  C  429 

pended,  and  the  character  of  such  improvements;  the  earn- 
ings and  receipts  from  each  branch  of  business  and  from  all 
sources;  the  operating  and  other  expenses;  the  balances  of 
profit  and  loss ;  and  a  complete  exhibit  of  the  financial  opera- 
tions of  the  carrier  each  year,  including  an  annual  balance 
sheet.    Such  reports  shall  also  contain  such  information  in 
relation  to  rates  or  regulations  concerning  fares  or  freights, 
w  or  agreements,  arrangements,  or  contracts  with  other  com- 
a  mon  carriers,  as  the  Commission  may  require ;  and  the  said 
^  Commission  may,  within  its  discretion,  for  the  purpose  of 
P^  enabling  it  the  better  to  carry  out  the  purposes  of  this  Act, 
prescribe  (if  in  the  opinion  of  the  Commission  it  is  prac- 
ticable to  prescribe  such  uniformity  and  methods  of  keeping 
accounts)  a  period  of  time  within  which  all  common  carriers 
subject  to  the  provisions  of  this  Act  shall  have,  as  near  as 
may  be,  a  uniform  system  of  accounts,  and  the  manner  in 
which  such  accounts  shall  be  kept.] 

Annual  Reports  of  the  Commission  to  Congress. 

Section  21.  That  the  Commission  shall,  on  or 
before  the  first  day  of  December  in  each  year,  make 
a  report,  which  shall  be  transmitted  to  Congress, 
and  copies  of  which  shall  be  distributed  as  are  the 
other  reports  transmitted  to  Congress.  This  report 
shall  contain  such  information  and  data  collected  by 
the  Commission  as  may  be  considered  of  value  in  the 
determination  of  questions  connected  with  the  regu- 
lation of  commerce,  together  with  such  recommen- 
dations as  to  additional  legislation  relating  thereto 
as  the  Commission  may  deem  necessary;  and  the 
names  and  compensation  of  the  persons  employed 
by  said  Commission. 


430  COMMERCIAL  LAW 

Persons  and  Property  That  May  be  Carried  Free  or 
at  Reduced  Rates. 

Section  22.  That  nothing  in  this  Act  shall  pre- 
vent the  carriage,  storage,  or  handling  of  property 
free  or  at  reduced  rates  for  the  United  States,  State, 
or  municipal  governments,  or  for  charitable  pur- 
poses, or  to  or  from  fairs  and  expositions  for  exhibi- 
tion thereat,  or  the  free  carriage  of  destitute  and 
homeless  persons  transported  by  charitable  societies, 
and  the  necessary  agents  employed  in  such  transpor- 
tation, or  the  issuance  of  mileage,  excursion,  or  com- 
mutation passenger  tickets ;  nothing  in  this  Act  shall 
be  construed  to  prohibit  any  common  carrier  from 
giving  reduced  rates  to  ministers  of  religion,  or  to 
municipal  governments  for  the  transportation  of  in- 
digent persons,  or  to  inmates  of  the  national  homes 
or  state  homes  for  disabled  volunteer  soldiers,  and 
of  soldiers'  and  sailors'  orphan  homes,  including 
those  about  to  enter  and  those  returning  home  after 
discharge,  under  arrangements  with  the  boards  of 
managers  of  said  homes;  nothing  in  this  Act  shall 
be  construed  to  prevent  railroads  from  giving  free 
carriage  to  their  own  officers  and  employees,  or  to 
prevent  the  principal  officers  of  any  railroad  com- 
pany or  companies  from  exchanging  passes  or  tickets 
with  other  railroad  companies  for  their  officers  and 
employees;  and  nothing  in  this  Act  contained  shall 
in  any  way  abridge  or  alter  the  remedies  now  exist- 
ing at  common  law  or  by  statute,  but  the  provisions 
of  this  Act  are  in  addition  to  such  remedies:  Pro- 
vided, Tliat  no  pending  litigation  shall  in  any  way 
be  affected  bv  this  Act:    Provided  further,  That 


APPENDIX  C  431 

nothing  in  this  Act  shall  prevent  the  issuance  of 
joint  interchangeable  five-thousand-mile  tickets, 
with  special  privileges  as  to  the  amount  of  free  bag- 
gage that  may  be  carried  under  mileage  tickets  of 
one  thousand  or  more  miles.  But  before  any  com- 
mon carrier,  subject  to  the  provisions  of  this  Act, 
shall  issue  any  such  joint  interchangeable  mileage 
tickets  with  special  privileges  as  aforesaid,  it  shall 
file  with  the  Interstate  Commerce  Commission  copies 
of  the  joint  tariffs  of  rates,  fares,  or  charges  on  which 
such  joint  interchangeable  mileage  tickets  are  to  be 
based,  together  with  specifications  of  the  amount  of 
free  baggage  permitted  to  be  carried  under  such 
tickets,  in  the  same  manner  as  common  carriers  are 
required  to  do  with  regard  to  other  joint  rates  by 
section  six  of  this  Act ;  and  all  the  provisions  of  said 
section  six  relating  to  joint  rates,  fares,  and  charges 
shall  be  observed  by  said  common  carriers  and  en- 
forced by  the  Interstate  Commerce  Commission  as 
fully  with  regard  to  such  joint  interchangeable  mile- 
age tickets  as  with  regard  to  other  joint  rates,  fares, 
and  charges  referred  to  in  said  section  six.  It  shall 
be  unlawful  for  any  common  carrier  that  has  issued 
or  authorized  to  be  issued  any  such  joint  interchange- 
able mileage  tickets  to  demand,  collect,  or  receive 
from  any  person  or  persons  a  greater  or  less  com- 
pensation for  transportation  of  persons  or  baggage 
under  such  joint  interchangeable  mileage  tickets 
than  that  required  by  the  rate,  fare,  or  charge  speci- 
fied in  the  copies  of  the  joint  tariff  of  rates,  fares,  or 
charges  filed  with  the  Commission  in  force  at  the 
time.    The  provisions  of  section  ten  of  this   Act 


43»  COMMERCIAL  LAW 

shall  apply  to  any  violation  of  the  requirements  of 
this  proviso. 

Jurisdiction  of  Courts  to  Issue  Writs  of  Peremptory 
Mandamus  Commanding  the  Movement  of  Inter- 
state Traffic  or  the  Furnishing  of  Cars  or 
Other  Transportation  Facilities. 

Section  23.  That  the  circuit  and  district  courts 
of  the  United  States  shall  have  jurisdiction  upon  the 
relation  of  any  person  or  persons,  firm,  or  corpora- 
tion, alleging  such  violation  by  a  common  carrier  of 
any  of  the  provisions  of  the  Act  to  which  this  is  a 
supplement  and  all  Acts  amendatory  thereof,  as  pre- 
vents the  relator  from  having  interstate  traffic 
moved  by  said  common  carrier  at  the  same  rates  as 
are  charged,  or  upon  terms  or  conditions  as  favor- 
able as  those  given  by  said  common  carrier  for  like 
traffic  under  similar  conditions  to  any  other  shipper, 
to  issue  a  writ  or  writs  of  mandamus  against  said 
common  carrier,  commanding  such  common  carrier 
to  move  and  transport  the  traffic,  or  to  furnish  cars 
or  other  facilities  for  transportation  for  the  party 
appljdng  for  the  writ:  Provided,  That  if  any  ques- 
tion of  fact  as  to  the  proper  compensation  to  the 
common  carrier  for  the  service  to  be  enforced  by  the 
writ  is  raised  by  the  pleadings,  the  writ  of  peremp- 
tory mandamus  may  issue,  notwithstanding  such 
question  of  fact  is  undetermined,  upon  such  terms  as 
to  secm'ity,  payment  of  money  into  the  court,  or 
otherwise,  as  the  court  may  think  proper,  pendii^g 
the  determination  of  the  question  of  fact:  Provided, 
That  the  remedy  hereby  given  by  writ  of  mandamuii 


^APPENDIX  C  433 

shall  be  cumulative,  and  shall  not  be  held  to  exclude 
or  interfere  with  other  remedies  provided  by  this 
Act  or  the  Act  to  which  it  is  a  supplement. 

Commission  Enlarged  to  Seven  Members  With 
Salaries  of  $10,000. 

Section  24.  That  the  Interstate  Commerce  Com- 
mission is  hereby  enlarged  so  as  to  consist  of  seven 
members  with  terms  of  seven  years,  and  each  shall 
receive  ten  thousand  dollars  compensation  annually. 
The  qualifications  of  the  Commissioners  and  the  man- 
ner of  the  payment  of  their  salaries  shall  be  as 
already  provided  by  law.  Such  enlargement  of  the 
Commission  shall  be  accomplished  through  appoint- 
ment by  the  President,  by  and  with  the  advice  and 
consent  of  the  Senate,  of  two  additional  Interstate 
Commerce  Commissioners,  one  for  a  term  expiring 
December  thirty-first,  nineteen  hundred  and  eleven, 
one  for  a  term  expiring  December  thirty-first,  nine- 
teen hundred  and  twelve.  The  terms  of  the  present 
Commissioners,  or  of  any  successor  appointed  to  fill  a 
vacancy  caused  by  the  death  or  resignation  of  any  of 
the  present  Commissioners,  shall  expire  as  heretofore 
provided  by  law.  Their  successors  and  the  succes- 
sors of  the  additional  Commissioners  herein  provided 
for  shall  be  appointed  for  the  full  term  of  seven 
years,  except  that  any  person  appointed  to  fill  a 
vacancy  shall  be  appointed  only  for  the  unexpired 
term  of  the  Commissioner  whom  he  shall  succeed. 
Not  more  than  four  Commissioners  shall  be  ap- 
pointed from  the  same  political  party. 

[In  the  following  sections — which  are  from  the 

28 


434  COMMERCIAL  LAW 

Hepburn  Act — the  words  ''this  Act"  refer  only  to 
the  Hepburn  Act. — Eds.] 


Attendance  of  Witnesses  and  Production  of 
Evidence. 

Additional  Section.  That  all  existing  laws  re- 
lating to  the  attendance  of  witnesses  and  the  produc- 
tion of  evidence  and  the  compelling  of  testimony 
under  the  Act  to  regulate  commerce  and  all  Acts 
amendatory  thereof  shall  apply  to  any  and  all  pro- 
ceedings and  hearings  under  this  Act. 

Additional  Section.  That  all  laws  and  parts  of 
laws  in  conflict  with  the  provisions  of  this  Act  are 
hereby  repealed,  but  the  amendments  herein  pro- 
vided for  shall  not  affect  causes  now  pending  in 
courts  of  the  United  States,  but  such  causes  shall  be 
prosecuted  to  a  conclusion  in  the  manner  heretofore 
provided  by  law. 

Additional  Section.  That  this  Act  shall  take 
effect  and  be  in  force  from  and  after  its  passage.* 

Approved  February  11,  1887;  amended  March  2, 
1889;  February  10, 1891;  February  8, 1895;  and  June 
29, 1906. 

*Note. — By  a  joint  resolution  adopted  after  the 
passage  of  the  Hepburn  Act,  it  was  provided  that 
this  Act  should  go  into  effect  sixty  days  after  June 
29,  1906. 

[A  summary  of  further  amendments  made  by 
Congress  in  1920  to  the  Interstate  Commerce  Act 
will  be  found  in  Part  IV  of  the  volume  entitled  "Rail- 
way Transportation— History,  Operation  and  Regu- 
lation."—Ed.] 


APPENDIX  C  435 

The  Elkins  Act 

AS  AMENDED. 

[Hepburn  bill  amendments  in  bold-faced  type.] 

An  Act  to  further  regulate  commerce  with  foreign 
nations  and  among  the  States. 

Be  it  enacted  by  the  Senate  and  House  of  Repre- 
sentatives of  the  United  States  of  America  in  Con- 
gress assembled: 

What  Constitutes  a  Misdemeanor  on  the  Part  of  a 

Corporation. 

Section  1.  That  anything  done  or  omitted  to  be 
done  by  a  corporation  common  carrier,  subject  to 
the  Act  to  regulate  commerce  and  the  Acts  amenda- 
tory thereof,  which,  if  done  or  omitted  to  be  done  by 
any  director  or  ofl&cer  thereof,  or  any  receiver,  trus- 
tee, lessee,  agent,  or  person  acting  for  or  employed 
by  such  corporation,  would  constitute  a  misdemeanor 
under  said  Acts  or  under  this  Act,  shall  also  be  held 
to  be  a  misdemeanor  committed  by  such  corporation, 
and  upon  conviction  thereof  it  shall  be  subject  to  like 
penalties  as  are  prescribed  in  said  Acts  or  by  this 
Act  with  reference  to  such  persons,  except  as  such 
penalties  are  herein  changed.  The  wilful  failure 
upon  the  part  of  any  carrier  subject  to  said  Acts  to 
file  and  publish  the  tariffs  or  rates  and  charges  as 
required  by  said  Acts,  or  strictly  to  observe  such 
tariffs  until  changed  according  to  law,  shall  be  a  mis- 
demeanor, and  upon  conviction  thereof  the  corpora- 
tion offending  shall  be  subject  to  a  fine  of  not  less 


436  COMMERCIAL  LAW 

than  one  thousand  dollars  nor  more  than  twenty 
thousand  dollars  for  each  offense;  and  it  shall  be 
unlawful  for  any  person,  persons,  or  corporation  to 
offer,  grant,  or  give,  or  to  solicit,  accept,  or  receive 
any  rebate,  concession,  or  discrimination  in  respect 
to  the  transportation  of  any  property  in  interstate 
or  foreign  commerce  by  any  common  carrier  subject 
to  said  Act  to  regulate  commerce  and  the  Acts 
amendatory  thereof  whereby  any  such  property  shall 
by  any  device  whatever  be  transported  at  a  less  rate 
than  that  named  in  the  tariffs  published  and  filed  by 
such  carrier,  as  is  required  by  said  Act  to  regulate 
commerce  and  the  Acts  amendatory  thereof,  or 
whereby  any  other  advantage  is  given  or  discrimina- 
tion is  practiced.  Every  person  or  corporation, 
whether  carrier  or  shipper,  who  shall  knowingly 
offer,  grant,  or  give,  or  solicit,  accept,  or  receive  any 
such  rebates,  concession,  or  discrimination  shall  be 
deemed  guilty  of  a  misdemeanor,  and  on  conviction 
thereof  shall  be  punished  by  a  fine  of  not  less  than 
one  thousand  dollars  nor  more  than  twenty  thousand 
dollars:  Provided,  That  any  person,  or  any  officer 
or  director  of  any  corporation  subject  to  the  pro- 
visions of  this  Act,  or  the  Act,  to  regulate  commerce 
and  the  Acts  amendatory  thereof,  or  any  receiver, 
trustee,  lessee,  agent,  or  person  acting  for  or  em- 
ployed by  any  such  corporation,  who  shall  be  con- 
victed as  aforesaid,  shall,  in  addition  to  the  fine 
herein  provided  for,  be  liable  to  imprisonment  in  the 
penitentiary  for  a  term  not  exceeding  two  years,  or 
both  such  fine  and  imprisonment,  in  the  discretion 
of  the  court.  Every  violation  of  this  section  shall 
be  prosecuted  in  any  court  of  the  United  States 


APPENDIX  C  437 

having  jurisdiction  of  crimes  within  the  district  in 
which  such  violation  was  committed,  or  through 
which  the  transportation  may  have  been  conducted; 
and  whenever  the  oifense  is  begun  in  one  jurisdic- 
tion and  completed  in  another  it  may  be  dealt  with, 
inquired  of,  tried,  determined,  and  punished  in  either 
jurisdiction  in  the  same  manner  as  if  the  offense  had 
been  actually  and  wholly  committed  therein. 

In  construing  and  enforcing  the  provisions  of  this 
section,  the  act,  omission,  or  failure  of  any  officer, 
agent,  or  other  person  acting  for  or  employed  by  any 
common  carrier,  or  shipper,  acting  within  the  scope 
of  his  employment,  shall  in  every  case  be  also  deemed 
to  be  the  act,  omission,  or  failure  of  such  carrier  or 
shipper  as  well  as  that  of  the  person.  Whenever  any 
carrier  files  with  the  Interstate  Commerce  Commis- 
sion or  publishes  a  particular  rate  under  the  provi- 
sions of  the  Act  to  regulate  commerce  or  Acts  amen- 
datory thereof,  or  participates  in  any  rates  so  filed 
or  published,  that  rate  as  against  such  carrier,  its 
officers  or  agents,  in  any  prosecution  begun  under 
this  Act  shall  be  conclusively  deemed  to  be  the  legal 
rate,  and  any  departure  from  such  rate,  or  any  offer 
to  depart  therefrom,  shall  be  deemed  to  be  an  offense 
under  this  section  of  this  Act. 

Any  person,  corporation,  or  company  who  shall 
deliver  property  for  interstate  transportation  to  any 
common  carrier,  subject  to  the  provisions  of  this  Act, 
or  for  whom  as  consignor  or  consignee,  any  such 
carrier  shall  transport  property  from  one  State,  Ter- 
ritory, or  the  District  of  Columbia  to  any  other  State, 
Territory,  or  the  District  of  Columbia,  or  foreign 
country  who  shall  knowingly  by  employee,  agent, 


438  COMMERCIAL  LAW 

officer,  or  otherwise,  directly  or  indirectly,  by  or 
through  any  means  or  device  whatsoever,  receive  or 
accept  from  such  common  carrier  any  sum  of  money 
or  any  other  valuable  consideration  as  a  rebate  or 
offset  against  the  regular  charges  for  transportation 
of  such  property,  as  fixed  by  the  schedule  of  rates 
provided  for  in  this  Act,  shall  in  addition  to  any 
penalty  provided  by  this  Act,  forfeit  to  the  United 
States  a  sum  of  money  three  times  the  amount  of 
money  so  received  or  accepted  and  three  times  the 
value  of  any  other  consideration  so  received  or  ac- 
cepted, to  be  ascertained  by  the  trial  court;  and  the 
Attorney-General  of  the  United  States  is  authorized 
and  directed,  whenever  he  has  reasonable  grounds 
to  believe  that  any  such  persons,  corporation,  or 
company  has  knowingly  received  or  accepted  from 
any  such  common  carrier  any  sum  of  money  or  other 
valuable  consideration  as  a  rebate  or  offset  as  afore- 
said, to  institute  in  any  court  of  the  United  States 
of  competent  jurisdiction,  a  civil  action  to  collect 
the  said  sum  or  sums  so  forfeited  as  aforesaid;  and 
in  the  trial  of  said  action  all  such  rebates  or  other 
considerations  so  received  or  accepted  for  a  period 
of  six  years  prior  to  the  commencement  of  the  action, 
may  be  included  therein,  and  the  amount  recovered 
shall  be  three  times  the  total  amount  of  money,  or 
three  times  the  total  value  of  such  consideration,  so 
received  or  accepted,  or  both,  as  the  case  may  be. 

P  [Section  1.     That  anything  done  or  omitted  to  be  done 

P?|  by  a  corporation  common  carrier,  subject  to  the  Act  to  regu- 

2  late  commerce  and  the  Acts  amendatory  thereof  which,  if 

g  done  or  omitted  to  be  done  by  any  director  or  officer  thereof, 

^  or  any  receiver,  trustee,  lessee,  agent,  or  person  acting  for 


APPENDIX  C  439 

or  employed  by  such  corporation,  would  constitute  a  misde- 
meanor under  said  Acts  or  under  this  Act  shall  also  be  held 
to  be  a  misdemeanor  committed  by  such  corporation,  and 
upon  conviction  thereof  it  shall  be  subject  to  like  penalties 
as  are  prescribed  in  said  Acts  or  by  this  Act  with  reference 
to  such  persons  except  as  such  penalties  are  herein  changed. 
The  willful  failure  upon  the  part  of  any  carrier  subject  to 
said  Acts  to  file  and  publish  the  tariffs  or  rates  and  charges 
as  required  by  said  Act  or  strictly  to  observe  such  tariffs 
until  changed  according  to  law,  shall  be  a  misdemeanor,  and 
upon  conviction  thereof  the  corporation  offending  shall  be 
subject  to  a  fine  of  not  less  than  one  thousand  dollars  nor 
more  than  twenty  thousand  dollars  for  each  offense ;  and  it 
shall  be  unlawful  for  any  person,  persons,  or  corporation  to 
offer,  grant,  or  give  or  to  solicit,  accept,  or  receive  any 
rebate,  concession,  or  discrimination  in  respect  of  the  trans- 
portation of  any  property  in  interstate  or  foreign  commerce 
H  by  any  common  carrier  subject  to  said  Act  to  regulate  com- 
<j  merce  and  the  Acts  amendatory  thereto  whereby  any  such 
PLi  property  shall  by  any  device  whatever  be  transported  at  a 
fi  less  rate  than  that  named  in  the  tariffs  published  and  filed 
by  such  carrier,  as  is  required  by  said  Act  to  regulate  com- 
merce and  the  Acts  amendatory  thereto,  or  whereby  any 
other  advantage  is  given  or  discrimination  is  practiced. 
Every  person  or  corporation  who  shall  offer,  grant,  or  give 
or  solicit,  accept  or  receive  any  such  rebates,  concession,  or 
discrimination  shall  be  deemed  guilty  of  a  misdemeanor,  and 
on  conviction  thereof  shall  be  punished  by  a  fine  of  not  less 
than  one  thousand  dollars  nor  more  than  twenty  thousand 
dollars.  In  all  convictions  occurring  after  the  passage  of 
this  Act  for  offenses  under  said  Acts  to  regulate  commerce, 
whether  committed  before  or  aftor  the  passage  of  this  Act, 
or  for  offenses  under  this  section,  no  penalty  shall  be  imposed 
on  the  convicted  party  other  than  the  fine  prescribed  by 
law,  imprisonment  wherever  now  prescribed  as  part  of  the 
penalty  being  hereby  abolished.  Every  violation  of  this  sec- 
tion shall  be  prosecuted  in  any  court  of  the  United  States 
having  jurisdiction  of  crimes  within  the  district  in  which 


440  COMMERCIAL  LAW 

violation  was  committed  or  through  which  the  transporta- 
tion may  have  been  conducted;  and  whenever  the  offense  is 
begun  in  one  jurisdiction  and  completed  in  another  it  may 
be  dealt  with,  inquired  of,  tried,  determined,  and  punished 
in  either  jurisdiction  in  the  same  manner  as  if  the  offense 
had  been  actually  and  wholly  committed  therein. 

In  construing  and  enforcing  the  provisions  of  this  section 

the  act,  omission,  or  failure  of  any  officer,  agent,  or  other 

person  acting  for  or  employed  by  any  common  carrier  acting 

F4  within  the  scope  of  his  employment  shall  in  every  case  be 

■«^   also  deemed  to  be  the  act,  omission,  or  failure  of  such  carrier 

fe   as  well  as  that  of  the  person.    Whenever  any  carrier  files 

Pi   with  the  Interstate  Commerce  Commission  or  publishes  a 

particular  rate  under  the  provisions  of  the  Act  to  regulate 

Commerce  or  Acts  amendatory  thereto,  or  participates  in 

any  rates  so  filed  or  published,  that  rate  as  against  such 

carrier,  its  officers,  or  agents  in  any  prosecution  begun  under 

this  Act  shall  be  conclusively  deemed  to  be  the  legal  rate, 

and  any  departure  from  such  rate,  or  any  offer  to  depart 

therefrom,  shall  be  deemed  to  be  an  offense  under  this 

section  of  this  Act.] 

Persons  Interested  in  Cases  May  be  Made  Parties 
and  Shall  be  Subject  to  Orders  or  Decrees. 

Section  2.  That  in  any  proceeding  for  the  en- 
forcement of  the  provisions  of  the  statutes  relating 
to  interstate  conunerce,  whether  such  proceedings 
be  instituted  before  the  Interstate  Commerce  Com- 
mission or  be  begun  originally  in  any  circuit  court 
of  the  United  States,  it  shall  be  lawful  to  include  as 
parties,  in  addition  to  the  carrier,  all  persons  inter- 
ested, or  affected  by  the  rate,  regulation,  or  practice 
under  consideration,  and  inquii'ies,  investigations, 
orders,  and  decrees  may  be  made  with  reference  to 
and  against  such  additional  parties  in  the  same  man- 


APPENDIX  C  441 

ner,  to  the  same  extent,  and  subject  to  the  same 
provisions  as  are  or  shall  be  authorized  by  law  with 
respect  to  carriers. 

Proceedings  to  Enjoin  or  Restrain  Departures  from 
Published  Rates  or  Any  Discrimination  Pro- 
hibited by  Law  Against  Carriers  and  Par- 
ties Interested  in  Traffic. 

Section  3.  That  whenever  the  Interstate  Com- 
merce Commission  shall  have  reasonable  ground  for 
belief  that  any  common  carrier  is  engaged  in  the  car- 
riage of  passengers  or  freight  traffic  between  given 
points  at  less  than  the  published  rates  on  file,  or  is 
committing  any  discriminations  forbidden  b}^  law, 
a  petition  may  be  presented  alleging  such  facts  to 
the  circuit  court  of  the  United  States  sitting  in  equity 
having  jurisdiction;  and  when  the  act  complained  of 
is  alleged  to  have  been  committed  or  as  being  com- 
mitted in  part  in  more  than  one  judicial  district  or 
State,  it  may  be  dealt  with,  inquired  of,  tried,  and 
determined  in  either  such  judicial  district  or  State, 
whereupon  it  shall  be  the  duty  of  the  court  sum- 
marily to  inquire  into  the  circumstances,  upon  such 
notice  and  in  such  manner  as  the  court  shall  direct 
and  without  the  formal  pleadings  and  proceedings 
applicable  to  ordinary  suits  in  equity,  and  to  make 
such  other  persons  or  coi^porations  parties  thereto 
as  the  court  may  deem  necessary,  and  upon  being 
satisfied  of  the  truth  of  the  allegations  of  said  peti- 
tion said  court  shall  enforce  an  observance  of  the 
published  tariffs  or  direct  and  require  a  discontinu- 
ance of  such  discrimination  by  proper  orders,  writs, 


442  COMMERCIAL  LAW 

and  process,  whicli  said  orders,  writs,  and  process 
may  be  enforceable  as  well  as  against  the  parties 
interested  in  the  traffic  as  against  the  carrier,  sub- 
ject  to  the  right  of  appeal  as  now  provided  by  law. 
It  shall  be  the  duty  of  the  several  district  attorneys 
of  the  United  States,  whenever  the  Attorney-General 
shall  direct,  either  of  his  own  motion  or  upon  the 
request  of  the  Interstate  Commerce  Commission,  to 
institute  and  prosecute  such  proceedings,  and  the 
proceedings  provided  for  by  this  Act  shall  not  pre- 
clude the  bringing  of  suit  for  the  recovery  of  dam- 
ages by  any  party  injured,  or  any  other  action  pro- 
vided by  said  Act  approved  February  fourth,  eigh- 
teen hundred  and  eighty-seven,  entitled  An  Act  to 
regulate  commerce  and  the  Acts  amendatory  thereof. 
And  in  proceedings  under  this  Act  and  the  Acts  to 
regulate  commerce  the  said  courts  shall  have  the 
power  to  compel  the  attendance  of  witnesses,  both 
upon  the  part  of  carrier  and  the  shipper,  who  shall 
be  required  to  answer  on  all  subjects  relating  directly 
or  indirectly  to  the  matter  in  controversy,  and  to 
compel  the  production  of  all  books  and  papers,  both 
of  the  carrier  and  the  shipper,  which  relate  directly 
or  indirectly  to  such  transaction;  the  claim  that  such 
testimony  or  evidence  may  tend  to  criminate  the 
person  giving  such  evidence  shall  not  excuse  such, 
person  fifom  testifying  or  such  corporation  produc- 
ing its  books  and  papers,  but  no  person  snail  be 
prosecuted  or  subjected  to  any  penalty  or  forfeiture 
for  or  on  account  of  any  transaction,  matter,  or  thing 
concerning  which  he  may  testify  or  produce  evi- 
dence documentary  or  otherwise  in  such  proceeding: 
Provided,  That  the  provisions  of  an  Act  entitled 


APPENDIX  C  443 

*'Aii  Act  to  expedite  the  hearing  and  determination 
of  suits  in  equity  pending  or  hereafter  brought  under 
the  Act  of  July  second,  eighteen  hundred  and  ninety, 
entitled  *An  Act  to  protect  trade  and  conunerce 
against  unlawful  restraints  and  monopolies,'  'An  Act 
to  regulate  commerce,'  approved  February  fom^th, 
eighteen  hundred  and  eighty-seven,  or  any  other  Acts 
having  a  like  purpose  that  may  be  hereafter  enacted, 
approved  February  eleventh,  nineteen  hundred  and 
three,"  shall  apply  to  any  case  prosecuted  under  the 
direction  of  the  Attorney-General  in  the  name  of 
the  Interstate  Commerce  Commission. 

Conflicting  Laws  Repealed. 

Section  4.  That  all  Acts  and  parts  of  Acts  in 
conflict  with  the  provisions  of  this  Act  are  herebj^ 
repealed,  but  such  repeal  shall  not  affect  causes  now 
pending  nor  rights  which  have  already  accrued,  but 
such  causes  shall  be  prosecuted  to  a  conclusion  and 
such  rights  enforced  in  a  manner  heretofore  provided 
by  law  and  as  modified  by  the  provisions  of  this  Act. 

Section  5.  That  this  Act  shall  take  effect  from 
its  passage. 

Approved  February  19,  1903;  amended  June  29, 
1906. 

[^Xote. — For  a  summary  of  Federal  legislation  affecting  Inter- 
state Commerce  up  to  and  including  the  year  1920,  see  Part  IV  of 
the  volume  on  "Railway  Transportation."] 


QUIZ  QUESTIONS 


CHAPTER  I. 

Page  11. 

1.  Name  the  four  great  legal  conceptions. 

2.  In  what  order  do  they  arise  1 

Page  12. 
1.     Give  the  principal  divisions  of  the  law. 

CHAPTER  n. 

Page  15. 

1.  Define  a  contract. 

2.  What  are  the  five  requisites  for  a  valid  contract? 

3.  How  many  parties  must  there  be  to  a  contract? 

Page  16. 

1.  How  many  parties  may  there  be  to  a  contract  ? 

2.  What  classes  of  persons  lack  the  power  of  con- 

tracting, either  wholly  or  in  part? 

Page  17. 
1.     To  what  extent  is  a  minor  bound  on  his  contract 
for  necessaries  ? 

Page  18. 
1.     On  what  other  contracts  is  an  infant  bound? 

445 


446  COMMERCIAL  LAW 

Page  19. 

1.  To  what  extent  are  the  contracts  of  insane  per- 

sons binding? 

2.  When  is  drunkenness  a  defense  to  a  contract? 

3.  When  is  the  contract  of  a  spendthrift  voidable? 

4.  To  what  extent  could  married  women  contract 

at  Common  Law  ? 

Page  20. 

1.  To  what  extent  have  married  women  in  America 

the  right  to  contract  ? 

2.  Wliat  are  the  contractual  rights  of  resident  liens  ? 

3.  What  are  the  contractual  rights  of  a  friendly  non- 

resident alien? 

4.  What  are  the  contractual  rights  of  a  hostile  non- 

resident alien? 

Page  21. 

1.  What  is  the  primary  requisite  in  the  making  of  a 

contract  ? 

2.  What  is  an  offer? 

Page  22. 

1.  How  may  an  offer  be  made? 

2.  How  long  does  an  offer  remain  open? 

Page  23. 

1.     When  does  an  offer  ripen  into  a  contract? 

Page  24. 

1.  How  may  an  acceptance  to  an  offer  be  made? 

2.  What  are  the  principal  classes  of  legal  contracts  1 


QUESTIONS  447 

Page  25. 

1.  What  agreements  in  restraint  of  trade  are  legal? 

2.  What  is  a  usurious  contract? 

Pages  26-8. 
1.    What  is  the  e:ffect  of  a  usurious  contract? 

Page  29. 

1.  What  contracts  are  illegal  because  of  their  in- 

jurious effect  on  the  government? 

2.  Was  a  gambling  contract  enforceable  at  Common 

Law? 

3.  Is  such  a  contract  enforceable  now? 

Page  30. 

1.  Are  contracts  made  on  Sunday  valid? 

2.  Are  contracts  in  restraint  of  marriage  valid  ? 

3.  Are  marriage  brokerage  contracts  valid  ? 

4.  Is  an  agreement  lawful  in  itself  made  to  further 

an  unlawful  purpose  valid? 

Page  31. 

1.  What  is  the  effect  of  an  agreement  partly  legal 

and  partly  illegal? 

2.  What  is  meant  by  consideration  ? 

3.  Was  a  consideration  necessary  under  the  early 

Common  Law? 

4.  When  did  the  requirement  for  a  consideration 

arise? 

Page  34. 

1.    What  was  the  Statute  of  Frauds? 


448  COMMEECIAL  LAW 

Pages  35-7. 

1.    What  contracts  do  the  Statute  of  Frauds  require 
to  be  in  writing'? 

Page  38. 

1.  When  may  a  person  not  a  party  to  a  contract 

dcquire  rights  under  the  contract  ? 

2.  Who  may  be  sued  in  the  case  of  a  joint  contract? 

3.  Who  may  be  sued  in  the  case  of  a  joint  and 

several  contract? 

Page  39. 

1.  What  was  the  rule  as  to  the  assignment  of  con- 

tracts at  Common  Law  ? 

2.  What  is  the  rule  at  the  present  time  ? 

3.  What  is  the  difference  between  the  interpretation 

and  the  construction  of  a  contract  ? 

Page  40. 
1.     Give  some  of  the  principal  rules  to  be  followed 
in  the  interpretation  and  construction  of  con- 
tracts. 

Page  41. 

1.  What  is  a  conditional  contract? 

2.  Name  the  different  kinds  of  conditions. 

3.  What  is  mistake? 

4.  When  is  it  a  defense  to  a  contract? 

Page  42. 

1.  Is  a  mistake  of  law  ever  a  defense  to  a  contract? 

2.  When  may  fraud  be  set  up  as  a  defense  to  a 

contract? 

3.  What  is  undue  influence? 


QUESTIONS  449 

Page  43. 
1.     In  what  ways  ma,y  a  contract  be  discharged  ? 

Pages  44-5. 
1.     What  are  Statutes  of  Limitations? 

Page  46. 
1.     What  is  a  quasi  contract  ? 

Page  47. 

1.  Give  some  illustrations  of  quasi  contracts. 

2.  What  is  the  situs  of  a  contract? 

Page  48. 

1.    The  law  of  what  place  governs  all  matters  rela- 
tive to  the  remedy  ? 

CHAPTER  in. 

Page  49. 

1.  Define  agency. 

2.  Who  may  be  an  agent? 

Page  50. 

1.  Describe  the  dual  character  of  agency. 

2.  Classify  agents. 

Page  51. 

1.  Define  brokers,  factors  and  auctioneers. 

2.  How  may  an  agent  be  appointed? 

Page  52. 

1.  Describe  the  extent  of  the  authority  of  an  agent. 

2.  Wliat    relation    does    the    agent    hold    to    the 

principal? 

3.  When  is  the  principal  bound  to  a  third  ^Derson? 

29 


450  COMMERCIAL  LAW 

Page  54. 

1.    When  is  an  agent  bound  on  a  contract  made  with 
a  third  person? 

Page  55. 
1.    How  may  an  agency  be  terminated? 


CHAPTER  IV. 

Page  57. 

1.  Define  Partnership. 

2.  What  is  meant  by  firm  property? 

Page  58. 

1.  Distinguish    between    firm    capital    and    firm 

property. 

2.  How  do  partners  share  in  profit  and  loss  ? 

Page  59. 

1.  What  is  the  nature  of  a  partner's  interest  in 

partnership  property? 

2.  What  is  the  extent  of  the  power  of  an  individual 

partner? 

Page  60. 

1.  How  are  partnership  affairs  governed? 

2.  What  is  the  extent  of  the  liability  of  an  out-going 

partner? 

3.  What  is  the  extent  of  the  liability  of  an  in- 

coming partner? 


QUESTIONS  451 

CHAPTER  V. 

Page  63. 

1.  Define  a  sale. 

2.  What  are  the  requisites  for  a  valid  contract  of 

sale? 

Page  64. 

1.  What  property  can  be  the  subject  of  a  sale? 

2.  When  does  the  title  pass  in  the  case  of  a  sale  ? 

Page  65. 
1.    Distinguish  between  conditions,  warranties,  and 
representations. 

Page  66. 
1.    What  is  the  doctrine  of  Caveat  Emptor? 

Page  67. 

1.  What  are  the  rights  of  a  vendor  in  the  case  of  a 

sale? 

2.  What  are  the  remedies  of  a  vendee? 

CHAPTER  VL 

Page  69. 

1.  Define  a  bailment. 

2.  How  may  the  bailment  relation  be  created? 

Page  70. 

1.  What  name  is  given  to  the  different  parties  in 

the  case  of  a  bailment? 

2.  Classify  bailments. 

3.  Give  the  degree  of  liability  in  each  case. 


452  COMMERCIAL  LAW 

Page  71. 

1.    What  is  the  extent  of  the  baiknent  liability  of  an 
inn-keeper? 

Pages  72-3. 

1.    What  is  the  extent  of  the  bailment  liability  of  a 
common  carrier? 

Page  74. 

1.    What  is  the  extent  of  the  bailment  liability  of  a 
carrier  of  passengers  ? 

CHAPTER  VIL 

Page  77. 

1.    Give  an  account  of  the  historical  origin  of  bills 
and  notes. 

Page  78. 

1.  What  are  bills  of  exchange  ? 

2.  What  are  promissory  notes? 

Page  79. 

1.    Enumerate  the  most  important  common  charac- 
teristics of  bills  and  notes. 

Page  80. 

1.  Must  a  bill  or  note  necessarily  be  made  payable 

in  money? 

2.  What  is  meant  by  negotiability? 

3.  Is  this  characteristic  absolutely  necessary  in  the 

case  of  bills  and  notes  ? 


QUESTIONS  453 

Page  81. 
1.    What  presumption  or  consideration  exists  in  the 
case  of  bills  and  notes '? 

Page  82. 

1.  What  are  dajs  of  grace? 

2.  Describe  the  method  of  acceptance  of  bills  of 

exchange. 

Page  84. 
1.    What  are  the  various  methods  by  which  nego- 
tiable instruments  may  be  transferred? 

Page  85. 
1.    What  is  an  endorsement? 

Page  86. 
1.    What  is  presentment  ? 

Page  88. 

1.    What  is  protest  ? 

Page  89. 
1.     Give  the  principal  excuses  for  failing  to  present, 
give  notice,  or  protest. 

Page  90. 

1.    What  are  the  two  classes  of  defenses  to  bills  and 
notes  ? 

Page  91. 

1.  Who  is  a  bona  fide  holder  for  value  ? 

2.  What  is  meant  by  acconunodation  paper? 

Page  92. 
1.    What  is  a  check? 


464  COMMERCIAL  LAW 

Pages  93-143. 

1.  What  is  the  Uniform  Negotiable  Instrument  Act  ? 

2.  Enmnerate  some  changes  in  the  law  of  bills  and 

notes  made  by  this  Act. 

CHAPTER  Vm. 

Page  145. 

1.  Define  guaranty. 

2.  Define  suretyship. 

Page  146. 
1.    Who  may  become  a  surety  or  guarantor! 

Page  148. 
1.    Describe  the  extent  of  the  liability  of  the  surety. 

Page  149. 

1.    Describe    the    extent    of    the    liability    of   the 
guarantor. 

Page  150. 
1.    What  is  a  bond? 

Page  161. 
1.    WhatisbaU? 

CHAPTER  IX. 

Page  153. 
1.    What  is  insurance? 

Page  154. 

1.  What  is  meant  by  an  insurable  interest  ? 

2.  When  must  the  insurable  interest  exist  in  the 

case  of  a  fire  insurance  policy? 


QUESTIONS  455 

t.    When  must  the  insurable  interest  exist  in  the 
case  of  a  life  insurance  policy? 

Pages  155-8. 

1.    Distinguish  between  warranties  and  repreaenta- 
tions  in  insurance  contracts. 


CHAPTER  X. 

Page  159. 
1.    Define  torts. 

Page  160. 

1.    What  are  the  necessary  requisites  to  support  an 
action  for  deceit? 

Page  161. 

1.    When  will  an  act  lie  for  trespass  on  personal 
property  ? 

Page  162. 

1 .    What  is  a  conspiracy  ? 

Pages  163-4. 

1.    When  may  an  action  be  brought  for  an  infringe- 
ment of  patents,  copyrights,  or  trade-marks? 

CHAPTER  XI. 

Page  165. 

1.  Define  larceny. 

2.  Define  embezzlement. 

Page  166. 
1.     Define  counterfeiting. 


456  COMMERCIAL  LAW 

CHAPTER  Xn. 

Page  169. 

1.  Define  damages. 

2.  Distinguish  between  proximate  consequences  and 

remote  consequences. 

Pages  170-1. 

1.  What  are  the  principal  rules  governing  the  dam- 
ages to  be  awarded  for  a  breach  of  con- 
tract as  laid  down  in  the  case  of  Hadley  vs. 
Baxendale  ? 

CHAPTER  Xni. 

Page  173. 
1.    Define  Equity. 

Page  174. 
1.    What  are  the  principal  divisions  of  eqidty? 

Page  175. 

1.  What  is  a  trust? 

2.  Classify  trusts. 

Page  176. 

1.  Who  may  be  a  trustee  ? 

2.  How  are  trustees  appointed? 

Page  177. 

1.  What  special  relief  can  equity  give  in  the  case  of 
contracts  ? 


QUESTIONS  457 

Page  178. 

1.  What  is  an  injunction  ? 

2.  Classify  injunctions. 

3.  What  are  some  of  the  important  classes  of  cases 

where  injunctions  will  be  granted^ 

Page  179. 

1.  What  is  a  mortgage? 

2.  How  was  a  mortgage  considered  under  the  Com- 

mon Law  ? 

Page  180. 
1.    How  does  equity  look  at  a  mortgage? 

Page  181. 
1.    How  may  a  mortgage  be  foreclosed  f 


CHAPTER  XIV. 

Page  183. 

1.  What  is  bankruptcy? 

2.  To  what  extent  do  the  State  Courts  have  the 

power  to  enact  Banki-uptcy  laws? 

Page  184. 

1.    What  are  the  banki-uptcy  courts  of  the  United 
States? 

Page  185. 

1.  Who  may  become  a  voluntary  bankrupt? 

2.  On  what  grounds  may  a  petition  of  involuntary 

bankru^jtcy  be  filed? 


458  COMMEECIAL  LAW 

Page  187. 

1.    What  are  the  duties  of  a  bankrupt? 

Page  189. 

1.    When  will  compositions  be  allowed  in  bankruptcy 
proceedings  ? 

Page  190-2. 

1.    What  liens  are  dissolved  and  conveyances  set 
aside  by  bankruptcy  proceedings'? 

Pages  193-5. 
1.    Describe  the  distribution  of  a  bankrupt's  estate. 

Pages  196-7. 

1.    When  will  a  discharge  in  bankruptcy  be  granted 
and  when  refused? 

CHAPTER  XV. 

Page  199. 

1.    Give  the  Commerce  Clause  in  the  United  States 
Constitution. 

Pages  200-1. 
1.    Give  a  brief  outline  of  the  history  of  this  clause. 

Pages  203-7. 
1.    What  is  included  under  the  term  Conamerce  ? 

Pages  208-11. 

1.    Enumerate  some  things  which  have  been  decided 
by  the  Supreme  Court  not  to  be  Commerce. 


QUESTIONS  45S 

Page  212. 

1.    What  power  do  the  States  have  over  Interstate 
Commerce  ? 

Pages  213-4. 

1.     Give  a  synopsis  of  the  decision  in  Gibbons  vs. 
Ogden. 

Pages  220-222. 

1.    Give  a  synopsis  of  the  decision  in  Cooley  rs. 
Wardens  of  the  Port. 

Page  223. 
1.    What  was  the  Original  Package  decision  t 

Pages  229-32. 

1.    Give  a  synopsis  of  the  decision  in  the  case  of 
Crandall  vs.  Nevada. 

Pages  232-37. 

1.  Give  a  brief  history  of  the  Interstate  Commerce 
Commission. 

Pages  238-45. 
1.    Describe  the  Anti-Trust  Act. 

Pages  240-2. 

1.  Name  some  of  the  recent  statutes  and  decisions 
upon  the  subject  of  the  regulation  of  Inter- 
state Commerce. 


INDEX 


A. 

A-Ccommodation  Paper 91 

Acceptance  in  Contracts 23 

Agency   49 

Dual  Character  of 50 

Termination  of 54 

Agents,  Classes  of 50 

Appointment   of 51 

Authority  of 52 

Eelations  with  Third  Persons 54 

Aliens 20 

Anti-Trust  Act 238 

AppointiAent  of  Agents 51 

Authority  of  Agents 52 

Auctioneers 52 

B. 

Bail 150 

Bailment,  Definition  of 69 

Creation  of  Relation 69 

Classification    of 70 

Involving  Special  Liability 71 

Liability  of  Innkeepers 71 

Liability  of  Common  Carriers 72 

Liability  of  Carriers  of  Passengers 75 

Bankruptcy    183 

National  Laws 183 

State  Laws 183 

Courts 184 

Voluntary 1 85 

461 


463  INDEX 

Involuntary   185 

Liens  Dissolved  by 190 

Bankrupts,  Dutiei  of 186 

Protection  of 188 

Detention  of 188 

Distribution  of  Estate 193 

Discharge  of 196 

Bills  and  Notes,  Historical  Development 77 

Common  Characteristics  of 79 

Certainty  of  Terms 79 

Payment  in  Money 80 

Negotiability    80 

Presumption  of  Consideration  in 81 

Transfer  of 84 

Indorsements  85 

Presentment  and  Protest 86 

Defenses  to 90 

Bona  Fide  Holders  for  Value 90 

Bills  of  Exchange 78 

Acceptance  of 8^ 

Bonds    150 

Brokers 51 

C. 

Cancellation 177 

Caveat  Emptor,  Doctrine  of 66 

Carriers  of  Passengers,  as  Bailments 75 

Checks    92 

Common  Carriers,  as  Bailments 72 

Commerce  Clause  in  the  Constitution 200 

Compositions    189 

Commerce,  Eegulation  of 199 

What   is 203 

What  Does  Not  Include 208 

Power  of  State  over 208 

Conditions    ^5 

Conditional    Contracts 40 

Consideration    31 


INDEX  463 

Necessity  for 31 

Forms  of 32 

Conspiracy   163 

Construction  of  Contracts 39 

Consequences,  Proximate 169 

Eemote   169 

Contracts,   Definition 15 

Eequisites  of 15 

Parties  to 15 

Making  of 21 

Offer   in 21 

Acceptance  in 23 

Illegal  24 

in  Restraint  of  Trade 24 

Usurous 25 

Gambling   29 

Partly  Illegal 30 

Consideration  in 31 

Eequired  Formalities  in  Making 34 

Operation   of 37 

Interpretation   of 39 

Construction  of 39 

Conditional 40 

Defenses  to 41 

Discharge   of 43 

Situs  of 47 

Cooley  vs.  Wardens  of  the  Port 220 

Copyrights,  Infringement  of 163 

Counterfeiting 166 

Crandall  vs.  Vevada 229 

Criminal  Law 165 

D. 

Damages 169 

Direct  and  Consequential 169 

in   Contract 1 70 

Days  of  Grace 82 

Deceit  169 


464  INDEX 

Elements  of 160 

Defenses  to  Contracts 43 

Delivery  and  Acceptance  in  Sale 66 

Discharge  of  Contracts 43 

Drunken  Persons 16-19 

Duress 42 

Duties 11 

E. 

Embezzlement   165 

Equitable    Titles 174 

Equitable  Eights 174 

Equitable   Eemedies 175 

Equitable  Relief  in  Case  of  Contracts 176 

Equity    173 

Definition  of 173 

Division  of 174 

F. 

Factors   51 

False  Weights  and  Measures 167 

Foreclosure  of  Mortgages 181 

Fraud   42 

Frauds,  Statute  of 35 

G. 

Gambling  Contracts 29 

Gibbons  vs.  Ogden 213 

Guarantor,  Who  May  Become 146 

Guaranty  and  Suretyship 145 

Making  the  Contract 147 

H. 

Hadley  vs.  Baxendale 170 

I. 

Illegal  Contracts 24 

Indorsements 84 

Injunctions - .  178 


INDEX  465 

Innkeepers,  Bailment  Liability  of 71 

Insane  Persons 16-19 

Insurance   3  53 

Nature   of  the   Contract 153 

Contract  of 154 

Warranties  and  Eepresentations  in 155 

Insurable  Interest 154 

Interpretation  of  Contracts 39 

Interstate  Commerce  Commission 233 

L. 

Larceny 165 

Law,  Great  Conceptions  of 11 

Divisions  of 13 

Legal    Conceptions 11 

Limited  partnership 61 

M. 

Making  of  Contracts 21 

Married  Women 16-19 

Minors • 16-17 

Contracts  of 17 

Mistake 41 

Mortgages 179 

Foreclosure  of 181 

N. 
Negotiability  of  Bills  aad  Notes 80 

0. 

Offer  in  Contracts 21 

Operation  of  Contracts 37 

P. 

Partners,  Shares  in  Profits  and  Loss 58 

Nature  of  Interest  in  Firm's  Property 59 

Powers    of •  59 

Out-going  60 

In-coming 60 

30 


466  INDEX 

Partnership,  Definition 57 

Property  of 57 

Government  of 60 

Limited 61 

Termination  of 61 

Parties  to  Contracts 15 

Parties  Incapable  of  Contracting 16 

Patents,  Infringement  of 163 

Presentment 86 

Presentment  and  Protest  of  Bills  and  Notes 86 

Principal,  Eelations  with  Third  Persons 54 

Principal  and  Agent 49 

Eelations  between 53 

Promissory  Notes 78 

Protest    88 

Proximate   Consequences 169 

Q. 

Quasi  Contracts *<5 

E. 

Eegulation  of  Commerce 199 

Eemedies H 

Eemote  Consequences 169 

Eepresentations 65,  155 

Eequisites  of  Contracts 15 

Bestraint  of  Trade,  Contracts  in 34 

Eights 11 

S. 

Sale,  Definition , ^ 

Contract  of ^3 

Subjects  of 64 

Delivery  and  Acceptance  in 66 

Situs  of  Contracts 47 

Specific  Performance 177 

Spendthrifts   16-19 

Statute  of  Frauds 35 

Statutes  of  Limitation 44 


INDEX  467 

Suretj,  or  Guarantor,  Who  May  Become 146 

Liability  of 147 

Eights  and  Eemedies 149 

Who  May  Become 146 

T. 

Termination  of  Agency 54 

Termination  of  Partnership 61 

Title,  Passing  by  Sale 64 

Torts,  Definition  of 159 

Trade,  Contracts  in  Eestraint  of 24 

Trespass  to  Personal  Property 161 

Trusts  175 

Classification  of 175 

Trustees    176 

U. 

Uniform  Negotiable  Instrument  Act ,  . .  93 

Undue  Influence 43 

Usurious  Contracts 25 

V. 

V«ndor,  Eightt  of 67 

Veiid««e,  Eemedi«i  of 67 

W. 

Wrongs 11 


